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Public Offering Registration - ORE PHARMACEUTICAL HOLDINGS INC. - 10-7-1997

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Public Offering Registration - ORE PHARMACEUTICAL HOLDINGS INC. - 10-7-1997 Powered By Docstoc
					AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1997 REGISTRATION NO. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GENE LOGIC INC. (Exact name of registrant as specified in its charter)
DELAWARE (State or jurisdiction of incorporation or organization) 8731 (Primary Standard Industrial Classification Code Number) 06-1411336 I.R.S. Employer Identification Number

10150 OLD COLUMBIA ROAD COLUMBIA, MARYLAND 21046 (410) 309-3100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) MICHAEL J. BRENNAN, M.D., PH.D. PRESIDENT AND CHIEF EXECUTIVE OFFICER GENE LOGIC INC. 10150 OLD COLUMBIA ROAD COLUMBIA, MARYLAND 21046 (410) 309-3100 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPIES TO:
FREDERICK T. MUTO, ESQ. L. KAY CHANDLER, ESQ. NANCY E. DENYES, ESQ. COOLEY GODWARD LLP 4365 EXECUTIVE DRIVE, SUITE 1100 SAN DIEGO, CA 92121 (619) 550-6000 LESLIE E. DAVIS, ESQ. LAWRENCE A. GOLD, ESQ. TESTA, HURWITZ & THIBEAULT, LLP HIGH STREET TOWER 125 HIGH STREET BOSTON, MA 02110 (617) 248-7000

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /________________________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /________________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED Common Stock, $.01 par value..................... AMOUNT TO BE REGISTERED (1) 3,450,000 PROPOSED MAXIMUM OFFERING PRICE PER SHARE $12.00 PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (2) $41,400,000 AMOUNT OF REGISTRATION FEE $12,546

(1) Includes 450,000 shares that the Underwriters have the option to purchase solely to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the Securities Act of 1933. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

SUBJECT TO COMPLETION, DATED OCTOBER 7, 1997 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

[LOGO] 3,000,000 SHARES COMMON STOCK All of the 3,000,000 shares of Common Stock offered hereby are being sold by GENE LOGIC INC. ("Gene Logic" or the "Company"). Prior to this offering, there has been no public market for the Common Stock of the Company. It is currently estimated that the initial public offering price of the Common Stock will be between $10.00 and $12.00 per share. See "Underwriting" for information relating to the method of determining the initial public offering price. Application has been made to have the Company's Common Stock quoted on the Nasdaq National Market under the symbol "GLGC." Japan Tobacco Inc. ("Japan Tobacco") is a party to a strategic alliance with the Company. As part of the strategic alliance, Japan Tobacco has agreed to purchase $3,000,000 of the Company's Common Stock in a private transaction concurrent with this offering at a price per share equal to the price per share at which Common Stock is sold in this offering. See "Business--Strategic Alliances--Japan Tobacco Inc."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO PUBLIC UNDERWRITING DISCOUNTS AND COMMISSIONS PROCEEDS TO COMPANY (1)

Per Share.................................. Total (2)..................................

$ $

$ $

$ $

(1) Before deducting expenses payable by the Company estimated at $600,000. (2) The Company has granted the Underwriters a 30-day option to purchase up to an additional 450,000 shares of Common Stock solely to cover over-allotments, if any. See "Underwriting." If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company will be $ , $ and $ , respectively.

The Common Stock is offered by the Underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that delivery of such shares will be made through the offices of BancAmerica Robertson Stephens, San Francisco, California, on or about , 1997. BANCAMERICA ROBERTSON STEPHENS HAMBRECHT & QUIST UBS SECURITIES The date of this Prospectus is , 1997

GENE LOGIC INC. MOLECULAR TOPOGRAPHY-TM- OF GENE EXPRESSION [GRAPHICAL DEPICTION OF MOLECULAR TOPOGRAPHY] Above is a Molecular Topographic representing a quantitative snapshot of the expression of essentially all of the genes in a human cell sample. The data were generated using, Gene Logic's proprietary READS technology and are represented using Gene Logic's Molecular Topography software tool. Gene Logic intends to use these technologies to discover drug targets and drug leads and to develop database products. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

TABLE OF CONTENTS
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Summary........................................................................................ Risk Factors................................................................................... Use of Proceeds................................................................................ Dividend Policy................................................................................ Capitalization................................................................................. Dilution....................................................................................... Selected Financial Data........................................................................ Management's Discussion and Analysis of Financial Condition and Results of Operations.......... Business....................................................................................... Management..................................................................................... Certain Transactions........................................................................... Principal Stockholders......................................................................... Description of Capital Stock................................................................... Shares Eligible For Future Sale................................................................ Underwriting................................................................................... Legal Matters.................................................................................. Experts........................................................................................ Additional Information......................................................................... Index to Financial Statements..................................................................

4 7 20 20 21 22 23 24 28 48 56 57 59 61 63 64 64 65 F-1

READS-TM-, MuST-TM-, Flow-thru Chip-TM-, Molecular Topography-TM-, GENE EXPRESS-TM-, ACCELERATED DRUG DISCOVERY-TM-, Pharmacology EXPRESS-TM-, Toxicology EXPRESS-TM-, rEST-TM-, TAG-TM- and quEST-TM- are trademarks of the Company. Tradenames and trademarks of other companies appearing in this Prospectus are the property of their respective holders. The Company was incorporated in Delaware in 1994. The Company's executive offices are located at 10150 Old Columbia Road, Columbia, Maryland 21046, and its telephone number is (410) 309-3100. 3

SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. THE COMPANY GENE LOGIC INC. ("Gene Logic" or the "Company") uses a proprietary system, based on analysis of gene expression and gene regulation, designed to accelerate the discovery of drug targets and drug leads. The Company's objective is to provide its pharmaceutical company partners with novel drug targets, drug leads and a suite of genomic database products to reduce the time, cost and risk associated with drug discovery. The Company believes that by building its portfolio of partnerships it will generate current revenues and establish a long-term economic interest in the product pipelines of multiple partners through milestone and royalty payments. Gene Logic has established major strategic alliances with Procter & Gamble Pharmaceuticals, Inc. ("Procter & Gamble") and Japan Tobacco Inc. ("Japan Tobacco"). The core of Gene Logic's ACCELERATED DRUG DISCOVERY system is its proprietary READS (Restriction Enzyme Analysis of Differentially-expressed Sequences) technology for analyzing patterns of gene expression. Gene Logic uses READS in its drug target and drug lead discovery programs and to generate genomic data for its database products. DRUG TARGET DISCOVERY. Gene Logic identifies and analyzes disease-associated genes and their functional pathways to determine which genes might encode useful drug targets and prioritizes targets for drug screening. Using READS, Gene Logic generates a gene expression profile, or Molecular Topography, representing a quantitative snapshot of the levels of expression of essentially all the genes expressed in a tissue sample. The Company compares normal and diseased tissues through a series of Molecular Topography snapshots, a "molecular movie," to identify the changes in gene expression that occur as the disease develops and progresses and to determine which genes are associated with the disease. In addition, using its MuST (Multiplex Selection of Transcription Factors) technology, Gene Logic characterizes the regions of the genes that regulate their expression. This allows the Company to identify genes which share common regulatory mechanisms with disease-associated genes and are therefore in the same functional pathways. Gene Logic has received notices of allowance for patent applications covering the key aspects of the READS and MuST technologies from the United States Patent and Trademark Office. DRUG LEAD DISCOVERY. Gene Logic is developing a proprietary, reusable Flow-thru Chip for high-throughput analysis of changes in the expression of known genes. The Company believes the Flow-thru Chip will enable the development of high-throughput screening assays to evaluate the effects of compounds on the expression of disease-associated genes identified by READS. For a given disease, the Company will design a customized Flow-thru Chip incorporating probes specific for these genes and use the chip to test the effects of compounds on cells. Compounds that have the desired effect on expression of the relevant genes may be evaluated as drug leads. Gene Logic believes this technology represents a new approach to drug discovery and has the potential to accelerate substantially the identification of drug leads. GENOMIC DATABASES. Gene Logic is developing a suite of genomic database products to accelerate the process of target identification and prioritization, the discovery of lead compounds and the preclinical and clinical development of drugs. The Company plans to market its genomic database products, either in a single package or as separate modules, to multiple pharmaceutical company customers. The Company's database products are: (i) the GENE EXPRESS NORMAL database, a reference set of gene expression profiles in a wide variety of normal tissues; (ii) the rare EST (rEST) database containing sequences for rarely-expressed genes that are not available through public sources; (iii) The Annotated Genome (TAG) database which assigns human genes to functional pathways based on their patterns of expression and regulation; (iv) the Pharmacology EXPRESS database to predict efficacy of lead compounds at the preclinical drug development stage; and (v) the Toxicology EXPRESS database for screening of lead compounds for common classes of toxicological effects. 4

The Company has designed and is continuing to develop a bioinformatics system to manage and analyze the information it generates. The system integrates Gene Logic's genomic data content with other proprietary or public genomic databases, protein databases and the chemical, screening and assay databases used by the Company's strategic partners. Gene Logic's business strategy is to (i) establish strategic alliances with pharmaceutical companies for drug target and drug lead discovery programs in specific disease areas, (ii) establish independent discovery programs and license resulting drug targets and drug leads to pharmaceutical companies for further development and commercialization, (iii) market its suite of genomic database products under non-exclusive license to multiple pharmaceutical company customers, and (iv) retain significant rights to new product opportunities, including diagnostic products, therapeutic proteins, gene therapy products and products in the fields of differential diagnosis, molecular staging of disease and pharmacogenomic profiling. The Company expects to receive a diversified stream of technology license fees, research funding, milestone payments and royalty or profit-sharing income from its strategic alliance partners and licensees. Gene Logic has established discovery programs in the fields of heart failure, renal disease, certain diseases of the central nervous system, osteoporosis and prostate cancer. The Company has collaborations with academic institutions and commercial organizations for access to relevant normal and diseased human tissues and cell types and animal disease models in these areas. To date, Gene Logic has partnered two of its discovery programs with pharmaceutical companies. In May 1997, the Company entered into a 4 1/2-year strategic alliance with Procter & Gamble for drug target discovery in heart failure. In September 1997, the Company and Japan Tobacco entered into a five-year strategic alliance for drug target and drug lead discovery in renal disease. Through both alliances, Gene Logic will receive committed technology access fees and research funding. In each case, the Company's partner has the right to expand the alliance to include discovery programs in two additional disease indications upon terms, including committed payments, identical to those covering the initial program. Gene Logic will also be entitled to receive additional payments for the achievement of specified target discovery, product development and associated regulatory milestones and royalties on worldwide net sales of all products that may result from each alliance. As part of its alliance, Japan Tobacco has agreed to purchase $3.0 million of Common Stock in the Company in a private placement concurrent with this offering at a price per share equal to the price per share at which Common Stock is sold in this offering. The Company also granted Japan Tobacco a non-exclusive license to the GENE EXPRESS NORMAL database, and Gene Logic intends to use its Flow-thru Chip technology for drug screening. Japan Tobacco is obligated to pay Gene Logic chip design fees and screening fees for use of the Flow-thru Chip and an accelerated schedule of milestone and royalty payments on any resulting products. The Company has retained certain rights to diagnostic products and certain classes of therapeutics under these alliances. THE OFFERING
Common Stock Offered by the Company............ Common Stock Outstanding after the Offering.... Use of Proceeds................................ 3,000,000 shares 13,382,377 shares (1) For research and development, capital expenditures, working capital and general corporate purposes, including possible acquisitions of complementary technologies, products or businesses. See "Use of Proceeds." GLGC

Proposed Nasdaq National Market Symbol.........

5

SUMMARY FINANCIAL DATA (in thousands, except per share data)
PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 ------------------STATEMENT OF OPERATIONS DATA: Revenues........................................... Operating expenses: Research and development........................ General and administrative...................... Total operating expenses.......................... Interest income, net.............................. Net loss.......................................... Pro forma net loss per share (2).................. Shares used in computing pro forma net loss per share (2).......................... $ $ -44 46 -----90 ------(90) ----------YEAR ENDED DECEMBER 31, -------------------1995 1996 --------- --------$ -$ -SIX MONTHS ENDED JUNE 30, -------------------1996 1997 --------- --------(UNAUDITED) $ -$ 167

486 258 --------744 ---------$ (744) -----------------

1,747 1,349 --------3,096 221 --------$ (2,875) ----------------$ (0.60) ----------------4,753

491 386 --------877 18 --------$ (859) -----------------

1,837 1,236 --------3,073 91 --------$ (2,815) ----------------$ (0.48) ----------------5,807

(1) Based on shares outstanding as of September 30, 1997. Includes (i) the sale of 272,727 shares of Common Stock to Japan Tobacco at a price equal to the assumed initial public offering price of $11.00 per share and (ii) 9,281,185 shares of Preferred Stock which will convert to Common Stock concurrent with the initial public offering. Excludes (i) 2,424,381 shares of Common Stock issuable upon exercise of outstanding stock options as of September 30, 1997 at a weighted average exercise price of $1.05 per share, and (ii) 162,576 shares of Common Stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $3.10 per share. Also excludes 61,000 shares of Common Stock issuable upon exercise of stock options granted after September 30, 1997 with an exercise price of $3.50 per share. See "Business--Strategic Alliances," "Management--Equity Incentive Plans" and "Description of Capital Stock--Warrants." (2) See Note 1 of Notes to Financial Statements for a description of the computation of pro forma net loss per share.
JUNE 30, 1997 ----------------------------------------PRO FORMA ACTUAL PRO FORMA (1) AS ADJUSTED (2) --------- ------------- --------------(UNAUDITED) $ 5,099 2,668 8,210 10,849 (7,374) $ 24,234 21,803 27,345 -22,610 $ 57,324 54,893 60,435 -55,700

BALANCE SHEET DATA: Cash and marketable securities.............................. Working capital............................................ Total assets............................................... Total mandatorily redeemable convertible preferred stock... Total stockholders' equity.................................

(1) Pro forma to give effect to the private placement of 4,444,443 shares of Series C Preferred Stock in July 1997, at a price of $4.50 per share, net of stock issue costs. (2) As adjusted to give effect to the sale by the Company of 3,000,000 shares of Common Stock offered hereby at an assumed initial public offering of $11.00 per share and 272,727 shares of Common Stock to Japan Tobacco at a price equal to the assumed initial public offering price per share and the application of the estimated net proceeds therefrom. See "Use of Proceeds" and "Business--Strategic Alliances."

EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) HAS BEEN ADJUSTED TO GIVE EFFECT TO THE CONVERSION OF ALL OUTSTANDING SHARES OF PREFERRED STOCK INTO COMMON STOCK UPON THE COMPLETION OF THIS OFFERING AND (II) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "CAPITALIZATION" AND "UNDERWRITING." 6

RISK FACTORS In addition to the other information in this Prospectus, the following risk factors should be considered carefully in evaluating the Company and its business before purchasing shares of Common Stock offered hereby. This Prospectus contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the matters set forth in the following risk factors and elsewhere in this Prospectus. TECHNOLOGICAL UNCERTAINTY AND PRODUCT DEVELOPMENT RISK The Company has developed and intends to continue to develop its ACCELERATED DRUG DISCOVERY system, including its proprietary READS and MuST technologies, bioinformatics system and Flow-thru Chip, for the identification of genes, drug targets and drug leads useful for the discovery and development of therapeutic and diagnostic products. These technologies are new and unproven approaches and are based on the assumption that information about gene expression and gene sequences may enable scientists better to understand complex disease processes. Generally, there is limited understanding of the roles of genes in these diseases, and relatively few therapeutic products based on gene discoveries have been developed and commercialized. There can be no assurance that the Company's technologies will enable it or its strategic partners to identify genes, drug targets and drug leads useful for the discovery and development of therapeutic and diagnostic products. Even if the Company is successful in identifying genes and drug targets associated with specific diseases, there can be no assurance that the Company or its strategic partners will be able to discover drug leads or develop products based on such discoveries. To date, no drug targets or drug leads have been identified based on the Company's technologies, and the Company has not commercialized any therapeutic or diagnostic products either alone or in conjunction with its strategic partners. Failure to identify genes, drug targets and drug leads useful for the discovery and development of therapeutic and diagnostic products will have a material adverse effect on the Company's business, financial condition and results of operations. The development of therapeutic and diagnostic products based on the Company's discoveries will also be subject to other risks of failure inherent in pharmaceutical development. These risks include, among others, the possibilities that any such products will be found to be ineffective or toxic, or otherwise fail to receive necessary regulatory approvals; that any of the products, if safe and effective, will prove difficult or impossible to manufacture on a large scale or will be uneconomical to market; that the proprietary rights of third parties will preclude the Company or its strategic partners from marketing any products developed; and that third parties will market equivalent or superior products. As a result, there can be no assurance that the activities of the Company or its strategic partners will result in any commercially viable products. The Company has created a prototype of the Flow-thru Chip and plans to commence in-house testing during 1998 but has not yet produced the Flow-thru Chip on a commercial scale. The Company is in the process of developing its suite of genomic database products, but, to date, only the GENE EXPRESS NORMAL database is commercially available. Other than the option to require the Company to develop Flow-thru Chip assays and the non-exclusive license to the GENE EXPRESS NORMAL database granted to Japan Tobacco, the Company has not sold or licensed rights to its Flow-thru Chip or any of its genomic database products. There can be no assurance that the development or commercial scale-up of the Flow-thru Chip or the genomic database products will be successful or that the Company will be successful in marketing such products. The success of the Company's genomic database products will depend on the Company's ability to generate genomic data content and analyze such data using software tools. Gene Logic's database products are complex and sophisticated and could contain design defects or software errors that could be difficult to detect and correct. There can be no assurance that, despite testing by the Company and its strategic partners and customers, errors, bugs and viruses will not be found in current and future products, if any. 7

Failure to maintain and further develop the necessary bioinformatics platform to support the drug discovery efforts of the Company and its partners could result in the loss of or delay in revenues and market acceptance, which could have a material adverse effect on the Company's business, financial condition and results of operations. Because the Company's genomic database products contain genomic information generated by the Company's technologies, the development and commercialization of the Company's genomic database products will be materially adversely affected in the event that its technologies fail to generate such information. See "Business--Gene Logic's ACCELERATED DRUG DISCOVERY System" and "--Gene Logic Programs and Products." RELIANCE ON STRATEGIC PARTNERS The Company's strategy for development and commercialization of therapeutic and diagnostic products based on its discoveries depends, in large part, upon the formation of multiple strategic alliances and licensing arrangements to pursue drug targets and drug leads in different disease areas. The Company has established strategic alliances with Procter & Gamble and Japan Tobacco in certain disease fields. These strategic alliances have only been formed in recent months. No drug targets have been identified pursuant to such alliances, and there can be no assurance that the alliances will be successful. There can also be no assurance that the Company will establish additional strategic alliances or licensing arrangements that it deems necessary to develop and commercialize products based upon its discovery programs, that any such agreements will be made under terms acceptable to the Company or that any future strategic alliances or licensing arrangements will ultimately be successful. The Company has received a substantial portion of its revenues since inception from alliances with its strategic partners and expects to continue to do so in the near term. Failure of the Company to enter into additional strategic alliances could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's strategy includes entering into multiple, concurrent strategic alliances. There can be no assurance that the Company will successfully manage simultaneous collaborative programs. Failure by the Company to manage existing and future strategic alliances, maintain confidentiality among strategic partners or prevent the occurrence of conflicts among strategic partners could lead to disputes that result in, among other things, a significant strain on management resources, legal claims involving significant time, expense and loss of reputation, loss of capital or a loss of revenues, any of which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company intends to rely on strategic partners for preclinical studies, clinical development, regulatory approval, manufacturing and marketing of therapeutic and diagnostic products, if any, resulting from its discovery programs. Agreements with strategic partners typically will allow such partners significant discretion in electing whether to pursue any of these activities. The Company cannot control the amount and timing of resources its strategic partners may devote to the Company's programs or potential products, and there can be no assurance that such partners will perform their obligations as expected. A strategic partner's performance under its alliance agreement with the Company could be materially adversely affected if such partner were involved in certain third party transactions such as a business combination or in the event that the partner had a significant strategic shift in its business focus. If any strategic partner were to breach its agreement with the Company, or otherwise fail to conduct its collaborative activities in a timely manner, such conduct could have a material adverse effect on the Company's business, financial condition and results of operations. Each of the Company's current strategic alliances provides the strategic partner with certain rights to terminate the alliance agreement without cause by giving Gene Logic six months notice at any time after 12 months from the date of commencement of the research program under such agreement. The early termination of any strategic alliance could have a material adverse effect on the Company's business, financial condition and results of operations. The Company intends to continue to rely on its strategic partners for significant funding in support of its research operations. The Company would be required to devote additional internal resources to such 8

programs, or to scale back or terminate certain programs, if such funding were not available or were reduced in amount. Under its current strategic alliances, the Company has agreed not to conduct certain research, independently or with other commercial third parties, that is in the same field as the research conducted under the alliance agreement. Consequently, such arrangements could have the effect of limiting the areas of research the Company may pursue, either alone or with others. Should a strategic partner fail to develop or commercialize a product to which it has rights, the Company's business may be materially adversely affected. There can be no assurance that a strategic partner will not develop, either alone or with others, alternative technologies or products which are competitive with any that might result from the Company's research program with the strategic partner. Possible disagreements between the Company and its partners could lead to delays in collaborative research, development or commercialization of certain products or could require or result in litigation or arbitration, which would be time consuming and expensive, and could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Gene Logic's Strategy" and "--Strategic Alliances." EARLY STAGE OF DEVELOPMENT; LIMITED OPERATING HISTORY; PROFITABILITY UNCERTAIN The Company is at an early stage of development. There is limited historical information available upon which an investor can base an evaluation of an investment in the Company. The Company was founded in September 1994, but did not scale up operations until May 1996 following its first major financing. Substantially all of the Company's resources have been, and for the foreseeable future will continue to be, dedicated to the development of the Company's ACCELERATED DRUG DISCOVERY system and its application to the identification of genes, drug targets and drug leads with therapeutic and diagnostic potential. All of the Company's programs and strategic alliances are at an early stage. The development of the Company's technologies and their application to the discovery of genes, drug targets and drug leads will require significant additional research and development and investment, including testing to further validate performance and demonstrate cost effectiveness. There can be no assurance that the Company's technologies will continue to be successfully developed, or that any therapeutic or diagnostic products discovered or developed through their utilization will prove to be commercially useful, meet applicable regulatory standards in a timely manner or at all, compete with other technologies and products, avoid infringing the proprietary rights of others, be manufactured in sufficient quantities or at reasonable costs or be marketed successfully. The Company expects that it will be a number of years, if ever, before the Company will recognize revenue from therapeutic or diagnostic product sales or royalties. The Company has incurred operating losses in each year since its inception, including net losses of approximately $2.9 million and $2.8 million during the year ended December 31, 1996 and the six months ended June 30, 1997, respectively, and as of June 30, 1997, had an accumulated deficit of $7.4 million. The Company expects to incur additional losses for at least the next several years and that such losses will increase as the Company expands its research and development activities. The Company's losses to date have resulted principally from costs incurred in research and development and from general and administrative costs associated with the Company's operations. To date, substantially all of the Company's revenues have been derived from payments from strategic alliances and licensing arrangements, and the Company expects that substantially all of its revenues for the foreseeable future will result from payments from strategic alliances and licensing arrangements and interest income. There can be no assurance that the Company will receive additional revenues under existing strategic alliances or that the Company will be successful in entering into any new strategic alliance that results in revenues. The Company's ability to generate revenues and achieve profitability is dependent in large part on the Company's ability to enter into additional strategic alliances, and on the ability of the Company and its strategic partners to discover genes and drug targets associated with particular diseases and, thereafter, utilize such discoveries to identify drug leads, develop therapeutic and diagnostic products, conduct preclinical studies and clinical trials, obtain required regulatory approvals and successfully manufacture, introduce and market such 9

products. In addition, to the extent that the Company relies upon others for these research, development and commercialization activities, the Company's ability to achieve profitability will be dependent in part upon the success of such outside parties. The time required to reach profitability is highly uncertain and there can be no assurance that the Company will be able to achieve profitability on a sustained basis, if at all. Failure to achieve significant revenues or profitability would have a material adverse effect on the Company's business, financial condition and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." DEPENDENCE UPON ACCESS TO CERTAIN MATERIALS AND INFORMATION AND LICENSED TECHNOLOGIES The Company obtains relevant normal and diseased human tissue samples, related clinical and other biological information and animal disease models through collaborations with academic institutions and commercial organizations. Use of the Company's technologies to discover disease-related genes and drug targets requires access to such materials and information and there is substantial competition for such materials and information. There can be no assurance that the Company will continue to be able to obtain access to such materials and information upon terms acceptable to the Company, if at all, and any material lack of availability of such materials and information would have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Gene Logic Programs and Products." Certain of the components of the ACCELERATED DRUG DISCOVERY system, such as the technologies underlying READS, MuST and the Flow-thru Chip, have been acquired or licensed from third parties. Changes in certain third party license agreements and relationships, or termination thereof, could materially adversely affect the Company's research and development activities. There can be no assurance that the Company will be able to acquire from third parties or develop new technologies, alone or with others. Failure to license necessary technologies would have a material adverse effect on the Company's business, financial condition and results of operations. There also can be no assurance that there will not be disruptions in the Company's relationships with third parties from whom the Company derives technology, or that any disruptions that do arise will be resolved in a timely and cost-effective manner, if at all. Any such disruptions could have a material adverse effect on the Company's business, financial condition and results of operations. FLUCTUATIONS IN OPERATING RESULTS The Company's operating results may fluctuate significantly from quarter to quarter as a result of a variety of factors, including changes in the demand for the Company's technologies and products, variations in payments under strategic alliances, including milestone payments, royalties, license fees and other contract revenues, the timing of new product introductions, if any, by the Company, changes in the research and development budgets of the Company's strategic partners and any potential partners, the introduction of new products by the Company's competitors and other competitive factors, regulatory actions, adoption of new technologies, manufacturing results, and the cost, quality and availability of cell and tissue samples, reagents and related components. If revenue in a particular period does not meet expectations, the Company may not be able to adjust significantly its level of expenditures in such period, which would have an adverse effect on the Company's operating results. The Company believes that quarterly comparisons of its financial results will not necessarily be a meaningful indication of future performance. Due to the foregoing and other unforeseen factors, in some future quarter or quarters the Company's operating results may be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock could be materially and adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 10

PATENTS AND PROPRIETARY RIGHTS; THIRD PARTY RIGHTS Gene Logic seeks United States and international patent protection for major components of its technology platform, including elements of its READS, MuST, Flow-thru Chip and bioinformatics technologies; it relies upon trade secret protection for certain of its confidential and proprietary information; and it uses license agreements both to access external technologies and assets and to transfer certain intellectual property rights to others. The Company's commercial success will be dependent in part upon its ability to obtain commercially valuable patent claims and to protect its intellectual property portfolio. As of September 30, 1997, the Company had exclusive rights to eight United States patent applications, as well as corresponding international and foreign patent applications, relating to its technologies. Although the Company has received notices of allowance for two United States patent applications covering the key aspects of the READS and MuST technologies, no patents have issued to date. The patent positions of pharmaceutical, biopharmaceutical and biotechnology companies, including Gene Logic, are generally uncertain and involve complex legal and factual questions. There can be no assurance that any of the pending patent applications to which the Company has exclusive rights will result in issued patents, that the claims of any patents which do issue will provide meaningful protection, that the Company will develop additional proprietary technologies that are patentable, that any patents licensed or issued to the Company or its strategic partners will provide a basis for commercially viable products or will provide the Company with any competitive advantages or will not be challenged by third parties, or that the patents of others will not have an adverse effect on the ability of the Company to do business. In addition, patent law relating to the scope of claims in the technology field in which the Company operates is still evolving. The degree of future protection for the Company's proprietary rights, therefore, is uncertain. Furthermore, there can be no assurance that others will not independently develop similar or alternative technologies, duplicate any of the Company's technologies, or, if patents are licensed or issued to the Company, design around the patented technologies licensed to or developed by the Company. In addition, the Company could incur substantial costs in litigation if it is required to defend itself in patent suits brought by third parties or if it initiates such suits. The Company is aware of a number of United States patents and patent applications and corresponding foreign patents and patent applications owned by third parties relating to the analysis of gene expression or the manufacture and use of DNA chips. There can be no assurance that these or other technologies will not provide third parties with competitive advantages over the Company and will not have a material adverse effect on the Company's business, financial condition and results of operations. In addition, certain third party patent applications contain broad claims, and it is not possible to determine whether or not such claims will be narrowed during prosecution and/or will be allowed and issued as patents, even if such claims appear to cover the prior art or have other defects. There can be no assurance that an owner or licensee of a patent in the field will not threaten or file an infringement action or that the Company would prevail in any such action. There can be no assurance that the cost of defending an infringement action would not be substantial and would not have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, there can be no assurance that any required licenses would be made available on commercially viable terms, if at all. Failure to obtain any required license could prevent the Company from utilizing or commercializing one or more of its technologies and could have a material adverse effect on the Company's business, financial condition and results of operations. In general, the Company intends to continue to apply for patent protection for methods relating to gene expression and to apply for patent protection for the individual disease genes and drug targets it discovers. Such patents may include claims relating to novel genes and gene fragments and to novel uses for known genes or gene fragments identified through its discovery programs. There can be no assurance that the Company will be able to obtain meaningful patent protection for its discoveries; even if patents are issued, the scope of the coverage or protection afforded thereby is uncertain. Failure to secure such 11

meaningful patent protection could have a material adverse effect on the Company's business, financial condition and results of operations. Several groups are attempting to identify and patent gene fragments and full-length genes, the functions of which have not been characterized, as well as fully characterized genes. There is substantial uncertainty regarding the possible patent protection for gene fragments or genes without known function or correlation with specific diseases. To the extent any patents issue to other parties on such partial or full-length genes, the risk increases that the potential products and processes of the Company or its strategic partners may give rise to claims of patent infringement. The public availability of partial or full sequence information or the existence of patent applications related thereto, even if not accompanied by relevant function or disease association, prior to the time the Company applies for patent protection on a corresponding gene could adversely affect the Company's ability to obtain patent protection with respect to such gene or related expression patterns. Furthermore, others may have filed, and in the future are likely to file, patent applications covering genes or gene products that are similar or identical to any for which the Company may seek patent protection. No assurance can be given that any such patent application will not have priority over patent applications filed by the Company. Any legal action against the Company or its strategic partners claiming damages and seeking to enjoin commercial activities relating to the affected products and processes could, in addition to subjecting the Company to potential liability for damages, require the Company or its strategic partners to obtain a license in order to continue to manufacture or market the affected products and processes. There can be no assurance that the Company or its strategic partners would prevail in any such action or that any license required under any such patent would be made available on commercially acceptable terms, if at all. The Company believes that there is likely to be significant litigation in the industry regarding patent and other intellectual property rights. If the Company becomes involved in such litigation, it could consume a substantial portion of the Company's managerial and financial resources and have a material adverse effect on the Company's business, financial condition and results of operations. Enactment of legislation implementing the General Agreement on Tariffs and Trade has resulted in certain changes to United States patent laws that became effective on June 8, 1995. Most notably, the term of patent protection for patent applications filed on or after June 8, 1995 is no longer a period of 17 years from the date of grant. The new term of United States patents will commence on the date of issuance and terminate 20 years from the earliest effective filing date of the application. Because the time from filing to issuance of biotechnology patent applications is often more than three years, a 20-year term from the effective date of filing may result in a substantially shortened period of patent protection which may adversely affect the Company's patent position. If this change results in a shorter period of patent coverage, the Company's business could be adversely affected to the extent that the duration and level of the royalties it is entitled to receive from its strategic partners are based on the existence of a valid patent covering the product subject to the royalty obligation. With respect to proprietary know-how that is not patentable and for processes for which patents are difficult to enforce, the Company has chosen to rely on trade secret protection and confidentiality agreements to protect its interests. The Company believes that several elements of its ACCELERATED DRUG DISCOVERY system involve proprietary know-how, technology or data which are not covered by patents or patent applications. In addition, the Company has developed a proprietary index of gene and gene fragment sequences which it updates on an ongoing basis. Some of these data will be the subject of patent applications whereas other data will be maintained as proprietary trade secret information. The Company has taken security measures to protect its proprietary know-how and technologies and confidential data and continues to explore further methods of protection. While Gene Logic requires all employees, consultants and collaborators to enter into confidentiality agreements, there can be no assurance that proprietary information will not be disclosed, that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the Company's trade secrets, or that the Company can meaningfully protect its trade secrets. In the case of a strategic 12

partnership or other collaborative arrangement which requires the sharing of data, the Company's policy is to make available to its partner only such data as are relevant to the partnership or arrangement, under controlled circumstances, and only during the contractual term of the strategic partnership or collaborative arrangement, and subject to a duty of confidentiality on the part of its partner or collaborator. There can be no assurance, however, that such measures will adequately protect the Company's data. Any material leak of confidential data into the public domain or to third parties may have a material adverse effect on the Company's business, financial condition and results of operations. The Company is a party to various license agreements which give it rights to use certain technologies and biological materials in its research and development processes. There can be no assurance that the Company will be able to maintain such rights on commercially reasonable terms, if at all. Failure by the Company to maintain such rights could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Intellectual Property." INTENSE COMPETITION; RAPID TECHNOLOGICAL CHANGE Competition among entities attempting to identify genes associated with specific diseases and to develop products based on such discoveries is intense. Gene Logic faces, and will continue to face, competition from pharmaceutical, biotechnology and diagnostic companies, academic and research institutions and government agencies, both in the United States and abroad. Several entities are attempting to identify and patent randomly sequenced genes and gene fragments, while others are pursuing a gene identification, characterization and product development strategy based on positional cloning. The Company is aware that certain entities are utilizing a variety of different gene expression analysis methodologies, including the use of chip-based systems, to attempt to identify disease-related genes. In addition, numerous pharmaceutical companies are developing genomic research programs, either alone or in partnership with the Company's competitors. Competition among such entities is intense and is expected to increase. In order to compete against existing and future technologies, the Company will need to demonstrate to potential customers that its technologies and capabilities are superior to competing technologies. Many of the Company's competitors have substantially greater capital resources, research and development staffs, facilities, manufacturing and marketing experience, distribution channels and human resources than the Company. These competitors may discover, characterize or develop important genes, drug targets or drug leads, drug discovery technologies or drugs in advance of Gene Logic or which are more effective than those developed by Gene Logic or its strategic partners, or may obtain regulatory approvals of their drugs more rapidly than the Company and its strategic partners, any of which could have a material adverse effect on any similar Gene Logic program. Moreover, there can be no assurance that the Company's competitors will not obtain patent protection or other intellectual property rights that would limit the Company's or its strategic partners' ability to use the Company's drug discovery technologies or commercialize therapeutic or diagnostic products, which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company also faces competition from these and other entities in gaining access to relevant samples used in its discovery programs. The Company will rely on its strategic partners for support of certain of its discovery programs and intends to rely on its strategic partners for preclinical and clinical development of related potential products and the manufacturing and marketing of such products. Each of the Company's strategic partners is conducting multiple product development efforts within each area which is the subject of its strategic alliance with Gene Logic. Generally, the Company's strategic alliance agreements do not preclude the strategic partner from pursuing development efforts utilizing approaches distinct from that which is the subject of the alliance. Any product candidate of the Company, therefore, may be subject to competition with a potential product under development by a strategic partner. See "--Reliance on Strategic Partners." 13

Future competition will come from existing competitors as well as other companies seeking to develop new technologies for drug discovery based on gene sequencing, gene expression analysis, bioinformatics and related technologies. In addition, certain pharmaceutical and biotechnology companies have significant needs for genomic information and may choose to develop or acquire competing technologies to meet such needs. Genomic technologies have undergone and are expected to continue to undergo rapid and significant change. The Company's future success will depend in large part on its maintaining a competitive position in the genomics field. Rapid technological development by the Company or others may result in products or technologies becoming obsolete before the Company recovers the expenses it incurs in connection with their development. Products offered by the Company could be made obsolete by less expensive or more effective drug target and drug lead technologies, including technologies which may be unrelated to genomics. There can be no assurance that the Company will be able to make the enhancements to its technology necessary to compete successfully with newly emerging technologies. See "Business--Competition." FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ACCESS TO ADDITIONAL FUNDING The Company has invested significant capital in its infrastructure and in its scientific and business development activities and expects capital and operating expenditures to increase over the next several years as it expands its operations. The Company believes that the net proceeds from this offering and the sale of shares to Japan Tobacco, existing cash and marketable securities and anticipated cash flow from strategic alliances will be sufficient to support the Company's operations for at least the next 24 months. However, this expectation is based on the Company's current operating plan, which could change as a result of many factors, and the Company could require additional funding sooner than expected. In addition, the Company may choose to raise additional capital due to market conditions or strategic considerations even if it has sufficient funds for its operating plan. The Company's actual future capital requirements and the adequacy of its available funds will depend on many factors, including progress of its discovery programs, the number and breadth of these programs, the ability of the Company to establish and maintain strategic alliance and licensing arrangements and the progress of the development and commercialization efforts of the Company's strategic partners. These factors also include the level of the Company's activities relating to its independent discovery programs and to the development and commercialization rights it retains in its strategic alliance arrangements, competing technological and market developments, the costs associated with obtaining access to tissue samples and related information and the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other intellectual property rights. The Company expects that it will require significant additional funding in the future, which it may seek through public or private equity offerings, debt financings or additional strategic alliance and licensing arrangements. No assurance can be given that additional financing or strategic alliance and licensing arrangements will be available when needed, or that, if available, such financing will be obtained on terms favorable to the Company or its stockholders. To the extent the Company raises additional capital by issuing equity or convertible debt securities, ownership dilution to stockholders will result. If adequate funds are not available when needed, the Company may be required to curtail operations significantly or to obtain funds by entering into strategic alliances and licensing arrangements, in which case the Company may be required to relinquish rights to certain of its technologies, discoveries or potential products, or to grant licenses on terms that are not favorable to the Company, any of which could have a material adverse effect on the Company's business, financial condition and results of operations. In the event that adequate funds are not available, the Company's business would be adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 14

ATTRACTION AND RETENTION OF KEY EMPLOYEES The Company is highly dependent on the principal members of its management and scientific staff. The loss of the services of any of these persons could significantly impede the accomplishment of the Company's scientific and business objectives. The Company's success is also dependent upon its ability to attract and retain additional qualified scientific, technical and managerial personnel. There is substantial competition among biotechnology, pharmaceutical and health care companies, universities, government entities and non-profit organizations for such personnel, and there can be no assurance that the Company will retain its key scientific, technical and managerial employees or that it will be able to attract, assimilate and retain such other highly qualified scientific, technical and managerial personnel as may be required in the future. The inability of the Company to retain its current scientific, technical and managerial personnel and to attract and retain additional key employees could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Competition," "--Scientific Advisers" and "--Employees." GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL; HAZARDOUS MATERIALS The Company does not plan to conduct clinical trials in humans or commercialize therapeutic products discovered as a result of its genes, drug target and drug lead discovery programs but intends to rely on its strategic partners to conduct such activities. Prior to marketing, any new drug developed by the Company's strategic partners must undergo an extensive regulatory approval process in the United States and other countries. This regulatory process, which includes preclinical studies and clinical trials, and may include post-marketing surveillance of each compound to establish its safety and efficacy, can take many years and require the expenditure of substantial resources. Data obtained from preclinical studies and clinical trials are subject to varying interpretations that could delay, limit or prevent regulatory approval. Delays or rejections may also be encountered based upon changes in United States Food and Drug Administration ("FDA") policies for drug approval during the period of product development and FDA regulatory review of each submitted new drug application ("NDA") in the case of new pharmaceutical agents, or product license application ("PLA") or biologics license application ("BLA") in the case of biological therapeutics. Similar delays may also be encountered in the regulatory approval of any diagnostic product, where such approval is required, and in obtaining regulatory approval in foreign countries. Delays in obtaining regulatory approvals could adversely affect the marketing of any drugs developed by the Company or its strategic partners, impose costly procedures upon the Company's or its partners' activities, diminish any competitive advantages that the Company or its partners may attain and adversely affect the Company's receipt of royalties. There can be no assurance that regulatory approval will be obtained for any drugs or diagnostic products developed by the Company or its strategic partners. Furthermore, regulatory approval may entail limitations on the indicated uses of a drug. Because certain of the products likely to result from the Company's drug target and lead discovery programs involve the application of new technologies and may be based upon a new therapeutic approach, such products may be subject to substantial additional review by various government regulatory authorities and, as a result, regulatory approvals may be obtained more slowly than for products based upon more conventional technologies. Even if regulatory approval is obtained, a marketed product and its manufacturer are subject to continuing review. Discovery of previously unknown problems with a product may result in withdrawal of the product from the market, and could have adverse effects on the Company's business, financial conditions and results of operations. Violations of regulatory requirements at any stage during the regulatory process, including preclinical studies and clinical trials, the approval process, post-approval or in good manufacturing practices manufacturing requirements, may result in various adverse consequences to the Company, including the FDA's delay in approval or refusal to approve a product, withdrawal of an approved product from the market or the imposition of criminal penalties against the manufacturer and NDA, PLA or BLA holder. No investigational new drug application ("IND") has been submitted for any 15

product candidate resulting from the Company's discovery programs, and no product candidate has been approved for commercialization in the United States or elsewhere. The Company intends to rely on its strategic partners to file INDs and generally direct the regulatory approval process. There can be no assurance that the Company's strategic partners will be able to conduct clinical testing or obtain necessary approvals from the FDA or other regulatory authorities for any products. Failure to obtain required governmental approvals will delay or preclude the Company's strategic partners from marketing drugs or diagnostic products developed through the Company's research or limit the commercial use of such products and could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's research and development activities involve the controlled use of certain biological and other hazardous materials, chemicals and various radioactive materials. The Company is subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of such materials and certain waste products. Although the Company believes that its safety procedures for handling and disposing of such materials comply with the standards prescribed by federal, state and local laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, the Company could be held liable for any damages that result, and any liability could exceed the resources of the Company. Other than such laws and regulations governing the generation, use and disposal of hazardous materials and wastes, and limiting workplace exposures to such materials, the Company does not believe its current and proposed activities are subject to any specific government regulation other than regulations affecting the operations of companies generally. See "Business--Government Regulation." ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF GENE-BASED DIAGNOSTICS The Company and its partners may seek to develop diagnostic products based on genes it discovers. The prospect of broadly available gene-based diagnostic tests raises issues regarding their appropriate utilization and the confidentiality of the information provided by such testing. It is possible that discrimination by third party payors, based on the results of such testing, could lead to the increase of premiums by such payors to prohibitive levels, outright cancellation of insurance or unwillingness to provide coverage to individuals showing unfavorable gene expression profiles. Similarly, employers could discriminate against employees with gene expression profiles indicative of the potential for high disease-related costs and lost employment time. Finally, government authorities could, for social or other purposes, limit or prohibit the use of such tests under certain circumstances. There can be no assurance that such ethical and social factors or concerns about genetic testing and target identification will not have a material adverse effect on market acceptance of the Company's technologies and products. REIMBURSEMENT RISK The levels of revenues and profitability of pharmaceutical companies may be affected by the continuing efforts of governments and third party payors to contain or reduce the costs of health care through various means including by limiting prices paid for pharmaceuticals. In both the United States and elsewhere, sale of prescription pharmaceuticals are dependent in part on the availability of reimbursement to the consumer from third party payors, such as government insurance programs (Medicare and Medicaid) and private and corporate health insurance plans. Third party payors are increasingly challenging the prices charged for pharmaceuticals and, in some cases, refusing payment for off-label use and other uses of pharmaceuticals they deem inappropriate. EXPANSION OF OPERATIONS; MANAGEMENT OF GROWTH The Company has recently experienced, and expects to continue to experience, significant growth in the number of its employees and the scope of its operations. The Company has significantly increased the scale of its operations and number of employees to support its partnered and independent discovery 16

programs and to manage its strategic alliances. The number of employees of the Company increased from three on January 1, 1996 to 57 on September 30, 1997. This growth has placed, and may continue to place, a significant strain on the Company's management, operations and systems. The Company's ability to manage such growth effectively will depend upon its broadening its management team and attracting, hiring and retaining skilled employees. In addition, in order to increase capacity to remain competitive and satisfy the needs of current and future strategic partners, the Company will be required to acquire additional capital equipment and resources. There can be no assurance that the Company will be able to manage its growth, and the Company's inability to manage growth effectively could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Employees" and "--Facilities." LIMITED CLINICAL DEVELOPMENT, MANUFACTURING, MARKETING AND SALES EXPERIENCE The Company has made no investment in therapeutic or diagnostic manufacturing, marketing or product sales resources and does not generally expect to engage directly in the manufacturing, marketing or sale of therapeutic or diagnostic products. Instead, the Company currently intends to contract with others to pursue the commercialization of therapeutic or diagnostic products based upon or discovered using its technologies. There can be no assurance that the Company will be able to enter into such arrangements on acceptable terms, if at all. The Company will be dependent to a significant extent on partners, licensees or other entities for development, manufacturing and commercialization of such products. The Company's dependence upon third parties for the manufacture, marketing and sales of therapeutic or diagnostic products may materially adversely affect the Company's ability to develop and deliver such products on a timely and competitive basis, if at all. To the extent the Company directly engages in development, manufacturing and marketing of certain therapeutic or diagnostic products, it will require substantial additional funds, personnel and production facilities. See "--Reliance on Strategic Partners." PRODUCT LIABILITY EXPOSURE Clinical trials, manufacturing, marketing and sale of any of the Company's or its partners' potential therapeutic or diagnostic products may expose the Company to liability claims from the use of such products. The Company currently does not carry product liability insurance. There can be no assurance that the Company or its partners will be able to obtain such insurance or, if obtained, that sufficient coverage can be acquired at a reasonable cost. The inability to obtain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products developed by the Company or its partners. A product liability claim or recall would have a material adverse effect on the Company's business, financial condition and results of operations. CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS Upon completion of this offering, the Company's executive officers, directors and affiliated individuals and entities together will beneficially own approximately 35.3% of the outstanding shares of Common Stock (34.2% if the Underwriters' over-allotment option is exercised in full). As a result, these stockholders, acting together, will be able to influence significantly and possibly control most matters requiring approval by the stockholders of the Company, including approvals of amendments to the Company's Certificate of Incorporation, mergers, a sale of all or substantially all of the assets of the Company, going private transactions and other fundamental transactions. In addition, the Company's Certificate of Incorporation, as it is proposed to be amended and restated concurrently with the closing of this offering (the "Restated Certificate"), does not provide for cumulative voting with respect to the election of directors. Consequently, the present executive officers, directors and affiliated individuals and entities will be able to control the election of the members of the Board of Directors of the Company. Such a 17

concentration of ownership could affect the liquidity of the Company's Common Stock and have an adverse effect on the price of the Common Stock, and may have the effect of delaying or preventing a change in control of the Company, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices. See "Principal Stockholders" and "Description of Capital Stock." NO PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE Prior to this offering, there has been no public market for the Common Stock, and there can be no assurance that an active public market for the Common Stock will develop or be sustained after this offering or that the market price of the Common Stock will not decline below the initial public offering price. The initial public offering price will be determined by negotiations between the Company and the Underwriters and is not necessarily indicative of the market price at which the Common Stock of the Company will trade after this offering. See "Underwriting" for a discussion of the factors considered in determining the initial public offering price. The market prices for securities of biotechnology and pharmaceutical companies have been highly volatile, and the market has experienced significant price and volume fluctuations that are often unrelated to the operating performance of particular companies. Announcements of technological innovations or new commercial products by the Company or its competitors, disputes or other developments concerning proprietary rights, including patents and litigation matters, developments concerning strategic alliance agreements, publicity regarding actual or potential results with respect to products or technology under development by the Company, its strategic partners or its competitors, regulatory developments in both the United States and foreign countries, public concern as to the efficacy of new technologies, quarterly fluctuations in the Company's operating results, future sales of substantial amounts of Common Stock by existing stockholders and comments by securities analysts, as well as general market conditions and other factors, may have a significant impact on the market price of the Common Stock. In particular, the realization of any of the risks described in these "Risk Factors" could have a material adverse impact on such market price. ANTI-TAKEOVER PROVISIONS The Restated Certificate provides for staggered terms for the members of the Board of Directors. In addition, the Restated Certificate authorizes the Board of Directors of the Company, without stockholder approval, to issue additional shares of Common Stock and to fix the rights, preferences and privileges of and issue additional shares of Preferred Stock with voting, conversion, dividend and other rights and preferences that could adversely affect the voting power or other rights of the holders of Common Stock. The issuance of Preferred Stock, rights to purchase Preferred Stock or additional shares of Common Stock may have the effect of delaying or preventing a change in control of the Company. In addition, the possible issuance of Preferred Stock or additional shares of Common Stock could discourage a proxy contest, make more difficult the acquisition of a substantial block of the Company's Common Stock or limit the price that investors might be willing to pay for shares of the Company's Common Stock. Further, the Restated Certificate provides that any action required or permitted to be taken by stockholders of the Company must be effected at a duly called annual or special meeting of stockholders and may not be effected by written consent. Special meetings of the stockholders of the Company may be called only by the Chairman of the Board of Directors, the President of the Company or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors. These and other provisions contained in the Restated Certificate and the Company's By-laws, as well as certain provisions of Delaware law, could delay or make more difficult certain types of transactions involving an actual or potential change in control of the Company or its management (including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices) and may limit the ability of stockholders to remove current management of the Company or approve transactions that stockholders may deem to be in their best interests and, therefore, could adversely affect the price of the Company's Common Stock. See "Description of Capital Stock." 18

SHARES ELIGIBLE FOR FUTURE SALE AND POTENTIAL ADVERSE EFFECT ON MARKET PRICE Future sales of Common Stock in the public market following this offering could adversely affect the market price of the Common Stock. Upon completion of this offering, the Company will have 13,382,377 shares of Common Stock outstanding, assuming no exercise of currently outstanding options or warrants. Of these shares, the 3,000,000 shares sold in this offering (plus any additional shares sold upon exercise of the Underwriters' over-allotment option) will be freely transferable without restriction under the Securities Act of 1933, as amended (the "Securities Act"), unless they are held by "affiliates" of the Company as that term is used under the Securities Act and the regulations promulgated thereunder. The remaining 10,382,377 shares of Common Stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 of the Securities Act (the "Restricted Shares"). Restricted Shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act. As a result of contractual restrictions and the provisions of Rules 144 and 701, additional shares will be available for sale in the public market as follows: (i) no Restricted Shares will be eligible for immediate sale on the date of this Prospectus; (ii) approximately 5,732 Restricted Shares will be eligible for sale 90 days after the date of this Prospectus; (iii) approximately 5,609,475 Restricted Shares will be eligible for sale 180 days after the effective date of this offering upon expiration of lock-up agreements and upon expiration of their respective holding periods under Rule 144; and (iv) the remainder of the Restricted Shares will be eligible for sale from time to time thereafter upon expiration of their respective holding periods under Rule 144. In addition, 1,200,752 shares issuable upon exercise of vested stock options will become eligible for sale 180 days after the date of this Prospectus upon expiration of lock-up agreements. The holders of 9,281,185 shares of Common Stock and the holders of warrants to purchase 30,051 shares of Common Stock have the right in certain circumstances to require the Company to register their shares under the Securities Act for resale to the public beginning three months after the effective date of this offering. If such holders, by exercising their demand registration rights, cause a large number of shares to be registered and sold in the public market, such sales could have an adverse effect on the market price for the Company's Common Stock. If the Company were required to include in a Company-initiated registration shares held by such holders pursuant to the exercise of their piggyback registration rights, such sales may have an adverse effect on the Company's ability to raise needed capital. In addition, the Company expects to file a registration statement on Form S-8 registering a total of approximately 6,134,268 shares of Common Stock subject to outstanding stock options or reserved for issuance under the Company's equity incentive plans. Such registration statement is expected to be filed and to become effective 180 days after the effective date of this offering. Shares registered under such registration statement will, subject to Rule 144 volume limitations applicable to affiliates, be available for sale in the open market, unless such shares are subject to vesting restrictions with the Company or the lock-up agreements described above. See "Management--Equity Incentive Plans," "Description of Capital Stock--Registration Rights," "Shares Eligible for Future Sale" and "Underwriting." DILUTION; ABSENCE OF CASH DIVIDENDS Purchasers of the shares of Common Stock offered hereby will experience immediate and substantial dilution in the net tangible book value of their investment from the initial public offering price. Additional dilution will occur upon exercise of outstanding options and warrants. See "Dilution" and "Shares Eligible for Future Sale." The Company has never paid any dividends and does not anticipate paying dividends in the foreseeable future. See "Dividend Policy." 19

USE OF PROCEEDS The net proceeds to the Company from the sale of the 3,000,000 shares of Common Stock offered by the Company hereby and the sale of 272,727 shares of Common Stock to Japan Tobacco are estimated to be approximately $33,090,000 ($37,693,500 if the Underwriters' over-allotment option is exercised in full), assuming an initial public offering price of $11.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from this offering and the sale of shares to Japan Tobacco to fund its research and development activities and capital expenditures, including scale-up of its laboratory, database and business development operations and tenant improvements, and for working capital and general corporate purposes. The amount and timing of these expenditures will vary significantly depending on a number of factors, including the progress of the Company's programs, future revenue growth, if any, and the amount of cash, if any, generated by the Company's operations. The Company's management will retain broad discretion in the allocation of such net proceeds. The Company may also use a portion of the net proceeds to fund acquisitions of complementary technologies, products or businesses, although the Company has no current agreements or commitments for any such acquisitions. Pending such uses, the Company intends to invest the net proceeds of this offering and the sale of shares to Japan Tobacco in short-term, interest bearing, investment-grade securities. The Company believes that its existing capital resources, together with the net proceeds from this offering and the sale of shares to Japan Tobacco, interest income and future payments due under its existing strategic alliances, will be sufficient to satisfy its current and projected funding requirements for at least the next 24 months. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." DIVIDEND POLICY The Company has never declared or paid dividends on its Common Stock and does not anticipate paying any dividends on its Common Stock in the forseeable future. The Company currently intends to retain any future earnings to fund the development of its business. 20

CAPITALIZATION The following table sets forth the capitalization of the Company as of June 30, 1997, and as adjusted to reflect the sale of 3,000,000 shares of Common Stock offered hereby at an assumed initial public offering price of $11.00 per share and the sale of 272,727 shares of Common Stock to Japan Tobacco at a price equal to the assumed initial public offering price per share and the application of the estimated net proceeds therefrom:
JUNE 30, 1997 ----------------------------------------------PRO FORMA ACTUAL (1) PRO FORMA (2) AS ADJUSTED (3) ----------- --------------- ----------------Current portion of long-term debt and capital lease obligations.......................................... Noncurrent portion of long-term debt and capital lease obligations.......................................... Series A, A-1, B and C convertible preferred stock, $0.01 par value; 9,550,000 shares authorized; 4,836,742 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted (3)................................ Stockholders' equity: Preferred Stock, $.01 par value; no shares authorized, actual and pro forma; 10,000,000 shares authorized, pro forma as adjusted; no shares issued or outstanding, actual, pro forma and pro forma as adjusted........................................... Common Stock, $.01 par value; 6,000,000 shares authorized, actual; 17,000,000 shares authorized, pro forma; 60,000,000 shares authorized, pro forma as adjusted; 637,733 shares issued and outstanding, actual; 9,918,918 shares issued and outstanding, pro forma; 13,191,645 shares issued and outstanding, pro forma as adjusted................. Additional paid-in capital........................... Deferred compensation, net........................... Unrealized loss on marketable securities............. Accumulated deficit.................................. Total stockholders' equity......................... Total capitalization............................. (in thousands) $ 350 --------------------$ 1,091 $ 350 ------------1,091 $ 350 ------------1,091

$

$

10,849

--

--

------------

--------

--------

6 63 (56) (1) (7,386) ----------(7,374) ----------$ 4,566 ---------------------

99 29,954 (56) (1) (7,386) ------22,610 ------$ 23,701 -------------

132 63,011 (56) (1) (7,386) ------55,700 ------$ 56,791 -------------

(1) Excludes: (i) 2,424,381 shares of Common Stock issuable upon exercise of outstanding stock options as of September 30, 1997 at a weighted average exercise price of $1.05 per share; and (ii) 162,576 shares of Common Stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $3.10 per share. Also excludes 61,000 shares of Common Stock issuable upon exercise of stock options granted after September 30, 1997 with an exercise price of $3.50 per share. See "Management--Equity Incentive Plans," "Description of Capital Stock--Warrants" and Note 13 of Notes to Financial Statements. (2) Pro forma to give effect to the private placement of 4,444,443 shares of Series C Preferred Stock in July 1997, at a price of $4.50 per share, net of stock issue costs, and the conversion of all outstanding shares of Preferred Stock into 9,281,185 shares of Common Stock upon the closing of this offering. (3) See the Financial Statements and Note 9 of Notes to the Financial Statements for descriptions of the authorized, issued and outstanding shares, liquidation preferences and conversion features of the individual Series of Preferred Stock. 21

DILUTION The pro forma net tangible book value of the Company as of June 30, 1997 was $22,290,322 or $2.25 per share of Common Stock. Pro forma net tangible book value per share represents the amount of the Company's total tangible assets less total liabilities, divided by the number of shares of Common Stock outstanding after giving effect to the conversion of all outstanding shares of Preferred Stock into Common Stock and the issuance of 4,444,443 shares of Series C Convertible Preferred Stock. Pro forma net tangible book value dilution per share represents the difference between the amount per share paid by purchasers of shares of Common Stock in this offering and the net tangible book value per share of the Common Stock immediately after completion of this offering. After giving effect to the sale by the Company of 3,000,000 shares of Common Stock offered hereby at an assumed initial public offering price of $11.00 per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, and the sale of 272,727 shares of Common Stock to Japan Tobacco at a price equal to the assumed initial public offering price per share and assuming no other changes in the net tangible book value after June 30, 1997, the Company's pro forma net tangible book value as of June 30, 1997 would have been $55,380,322 or $4.20 per share. This represents an immediate increase in pro forma net tangible book value of $1.95 per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $6.80 per share to new purchasers of Common Stock in this offering and in the sale of shares of Common Stock to Japan Tobacco, as illustrated by the following table:
Assumed initial public offering price per share............ Pro forma net tangible book value per share as of June 30, 1997............................................... Increase attributable to new investors................... Pro forma net tangible book value per share after the offering................................................. Dilution to new investors.................................. $ $ 2.25 1.95 --------4.20 --------$ 6.80 ----------------11.00

The following table sets forth on a pro forma basis, as of June 30, 1997, the difference between the number of shares of Common Stock purchased from the Company, the total consideration paid and the average price per share paid by the existing holders of Common Stock and by the new investors, before deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company:
SHARES PURCHASED ------------------------NUMBER PERCENT ------------ ----------9,918,918 75.2% 3,272,727 24.8 ---------------13,191,645 100.0% ------------------------------TOTAL CONSIDERATION -------------------------AMOUNT PERCENT ------------- ----------$ 30,176,700 45.6% 36,000,000 54.4 ----------------$ 66,176,700 100.0% --------------------------------AVERAGE PRICE PER SHARE ------------$ 3.04 11.00

Existing stockholders (1).......................... New investors...................................... Total............................................

(1) Gives effect to the conversion of all outstanding shares of Preferred Stock (including the Series C Preferred Stock issued subsequent to June 30, 1997) into 9,281,185 shares of Common Stock upon the closing of this offering. The calculation of net tangible book value and the other computations above assume no exercise of outstanding options and warrants. As of June 30, 1997, 1,403,394 shares of Common Stock were subject to outstanding options and warrants at a weighted average exercise price of $0.26 per share. To the extent additional shares are purchased pursuant to the exercise of outstanding options and warrants, there will be further dilution to new investors. See "Management--Equity Incentive Plans," "Description of Capital Stock-- Warrants" and Note 13 of Notes of Financial Statements. 22

SELECTED FINANCIAL DATA The selected financial data presented below for the period from September 22, 1994 (inception) through December 31, 1994, and the years ended December 31, 1995 and 1996 and at December 31, 1994, 1995 and 1996 are derived from the Company's financial statements audited by Arthur Andersen LLP, independent auditors, which are included elsewhere in this Prospectus. The statement of operations data for the six months ended June 30, 1996 and 1997 and the balance sheet data at June 30, 1996 and 1997 have been derived from unaudited financial statements; however, management believes such financial statements include all adjustments, consisting only of normal recurring adjustments, that the Company considers necessary for a fair presentation of the financial position and results of operations for these periods. Operating results for the six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the entire year ended December 31, 1997. The data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes thereto appearing elsewhere in this Prospectus.
PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 --------------------YEAR ENDED DECEMBER 31, -------------------1995 1996 --------- --------SIX MONTHS ENDED JUNE 30, -------------------1996 1997 --------- --------(UNAUDITED)

STATEMENT OF OPERATIONS DATA: Revenues.............................................. Operating expenses: Research and development.......................... General and administrative........................ Total operating expenses.............................. Interest income, net.................................. Net loss.............................................. Pro forma net loss per share (1)...................... Shares used in computing pro forma net loss per share (1).................................................

(IN THOUSANDS, EXCEPT PER SHARE DATA) $ -44 46 --90 ---(90) ----$ -$ -$ -$ 167

$

486 258 --------744 ---------$ (744) -----------------

1,747 1,349 --------3,096 221 --------$ (2,875) ----------------$ (0.60) ----------------4,753

491 386 --------877 18 --------$ (859) -----------------

1,837 1,236 --------3,073 91 --------$ (2,815) ----------------$ (0.48) ----------------5,807

DECEMBER 31, ------------------------------1994 1995 1996 --------- --------- --------(IN THOUSANDS) $ -298 310 310 400 (90) $ -348 245 423 $ 5,671 4,590 7,817 446 10,481 (4,199)

JUNE 30, -------------------1996 1997 --------- --------(UNAUDITED) 6,857 6,604 7,534 456 8,772 (1,865) $ 5,099 2,668 8,210 1,441 10,849 (7,374)

BALANCE SHEET DATA: Cash and marketable securities................................ Working capital............................................... Total assets.................................................. Total long-term debt and capital lease obligations............ Total mandatorily redeemable convertible preferred stock............................................. Total stockholders' equity....................................

$

1,153 (834)

(1) See Note 1 of Notes to Financial Statements for a description of the computation of the pro forma net loss per share. 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements which involve risk and uncertainties. Actual events and results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including the matters set forth under the caption "Risk Factors" and elsewhere in this Prospectus. OVERVIEW The Company was incorporated in September 1994, and has devoted substantially all of its resources to the development of its genomics technologies, bioinformatics systems and database products used to identify the expression of genes, drug targets and drug leads. The Company has incurred losses since inception and, as of June 30, 1997, had an accumulated deficit of $7.4 million. The Company entered into a strategic alliance with Procter & Gamble in the field of heart failure in May 1997 and with Japan Tobacco in the field of renal disease in September 1997. These agreements provide the Company with various combinations of technology and database access fees and research funding and may provide certain additional payments upon the attainment of research and regulatory milestones and royalty payments based on sales of any products resulting from the collaborations. Revenue recognized under the alliance with Procter & Gamble through June 30, 1997 totalled approximately $167,000. Each strategic partner has the option to expand the collaboration to cover two additional disease indications. In addition, Japan Tobacco is also obligated to purchase $3.0 million of the Company's Common Stock in a private placement to close simultaneously with this offering. The Company's future profitability will depend in part on the successful development and marketing of the ACCELERATED DRUG DISCOVERY system, the genomic database products and the Flow-thru Chip and the establishment of strategic alliances. Payments from strategic alliance partners and interest income are expected to be the only sources of revenue for the foreseeable future. These payments will include committed technology access fees and milestone payments for the discovery of drug targets and leads. Such revenue is dependent in large part on the discovery of genes, drug targets and drug leads using the Company's technologies. Royalties or other revenue from commercial sales of products developed from any therapeutic or diagnostic product identified using the Company's technologies are not expected for at least several years, if at all. Payments under strategic alliances will be subject to significant fluctuation in both timing and amount, and, therefore, the Company's results of operations for any period may not be comparable to the results of operations for any other period. Furthermore, the generation of significant revenues and profitability will depend upon the Company entering into additional alliances. There can be no assurance that the Company will enter into additional alliances on acceptable terms, if at all, or that such current or future alliances will be successful. The Company has incurred operating losses in each year since its inception, including net losses of approximately $2.9 million and $2.8 million for the year ended December 31, 1996 and the six months ended June 30, 1997, respectively, and at June 30, 1997, the Company had an accumulated deficit of approximately $7.4 million. The Company's losses have resulted principally from costs incurred in research and development and from general and administrative costs associated with the Company's operations. These costs have exceeded the Company's interest income and revenues which to date have been generated principally from strategic alliances. The Company expects to incur substantial additional operating losses over the next few years as a result of increases in its expenses for research and development capabilities. The Company's quarterly operating results may fluctuate significantly as a result of a variety of factors, including changes in the demand for the Company's technologies and products, variations in payments under strategic alliances, including milestone payments, royalties, license fees and other contract 24

revenues, and the timing of new product introductions, if any, by the Company. The Company's quarterly operating results may also fluctuate significantly depending on changes in the research and development budgets of the Company's strategic partners and any potential partners, the introduction of new products by the Company's competitors and other competitive factors, regulatory actions, adoption of new technologies, manufacturing results, and the cost, quality and availability of cell and tissue samples, reagents and related components. RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 Revenue under strategic alliance agreements was $167,000 for the six months ended June 30, 1997. There was no revenue for the six months ended June 30, 1996. The 1997 revenue resulted from the Company's strategic alliance agreement with Procter & Gamble. Research and development expenses increased to $1,837,000 for the six months ended June 30, 1997 from $491,000 for the comparable period in 1996. This increase was primarily attributable to increased payroll and personnel expenses as the Company hired additional research and development personnel, increased purchases of laboratory supplies and increased equipment depreciation as a result of capital expenditures. The Company expects research and development expenses to continue to increase as personnel and research and development facilities are expanded to accommodate new and existing strategic alliances. General and administrative expenses increased to $1,236,000 for the six months ended June 30, 1997 from $386,000 for the comparable period in 1996. This increase was primarily attributable to increased payroll and personnel expenses as the Company hired additional management and administrative personnel and professional fees in connection with the overall scale-up of the Company's operations and business development efforts. The Company expects that general and administrative expenses will continue to increase as the Company continues to expand its operations. Net interest income increased to $91,000 for the six months ended June 30, 1997 from $18,000 for the comparable period in 1996. This increase was primarily due to larger cash and investment balances on hand during 1997 as a result of private placements of equity securities. As of June 30, 1997, the Company had accumulated losses of $7.4 million since inception and, therefore, has not paid any federal income taxes. Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are uncertain. Accordingly, valuation allowances in amounts equal to the deferred tax assets have been established to reflect these uncertainties. See Note 7 of Notes to Financial Statements. YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995 Research and development expenses increased to $1,747,000 in 1996 from $486,000 in 1995. This increase was primarily attributable to increased payroll and personnel expenses as the Company hired additional research and development personnel, increased purchases of laboratory supplies and increased contracted services. General and administrative expenses increased to $1,349,000 in 1996 from $258,000 in 1995. This increase was primarily attributable to increased payroll and personnel expenses as the Company hired additional management and administrative personnel and professional fees in connection with the expansion of the Company's operations and business development efforts. The Company had net interest income of $221,000 in 1996 resulting from interest earned on cash and marketable securities derived from private placements of equity securities. The Company did not earn interest income in 1995. 25

YEAR ENDED DECEMBER 31, 1995 AND PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 Research and development expenses increased to $486,000 in 1995 from $44,000 in the 1994 period. This increase was primarily due to the inclusion of a full year of operations in 1995 and to payroll and personnel expenses as the Company scaled-up its research and development efforts. General and administrative expenses increased to $258,000 in 1995 from $46,000 in the 1994 period. This increase was primarily due to the inclusion of a full year of operations in 1995 as well as increased payroll, personnel and facility costs as the Company established operations. LIQUIDITY AND CAPITAL RESOURCES From inception through June 30, 1997, the Company financed its operations through private placements of equity securities, payment from a strategic alliance partner, a capital lease and an equipment loan. The private placement of equity securities has provided the Company with aggregate gross proceeds of approximately $10,160,000 as of June 30, 1997. The Company also has obtained $3,000,000 under its strategic alliance with Procter & Gamble, as of June 30, 1997, comprised of an initial research and technology access payment of $1,000,000 and a $2,000,000 note which will be forgiven over the initial 18 months of the agreement upon the Company's performance of research obligations. The Company has also obtained $471,000 of capital lease financing and $1,084,000 under an equipment loan. As of June 30, 1997, the Company had approximately $5,099,000 in cash and marketable securities. Amounts financed for equipment under a capital lease for the year ended December 31, 1996 were approximately $471,000. The Company also had purchases of equipment of approximately $12,000, $1,339,000 and $762,000 during the years ended December 31, 1995 and 1996 and the six months ended June 30, 1997, respectively. Although the Company had no material commitments for capital expenditures as of June 30, 1997, the Company expects capital expenditures to increase over the next several years as it expands its facilities and acquires scientific and computer equipment to support the planned expansion of its research and development efforts. As of December 31, 1996, the Company had net operating loss carryforwards of approximately $2,779,000 to offset federal and state income taxes. The Company's research and development tax credit carryforwards were estimated to be approximately $56,000 for federal income tax purposes. If not utilized, the federal and state net operating loss carryforwards will expire through 2011. See Note 7 to Notes to Financial Statements. To date, all revenue received by the Company has been from its strategic alliances. The Company expects that substantially all revenue for the foreseeable future will come from strategic alliance partners and interest income. Furthermore, the Company's ability to achieve profitability will be dependent upon the ability of the Company to enter into additional strategic alliances. There can be no assurance that the Company will be able to negotiate additional strategic alliances in the future on acceptable terms, if at all, or that current or future strategic alliances will be successful and provide the Company with expected benefits. The Company believes that the net proceeds from this offering and the sale of shares to Japan Tobacco, existing cash and marketable securities and anticipated cash flow from its current strategic alliances will be sufficient to support the Company's operations for at least the next 24 months. The Company's actual future capital requirements and the adequacy of its available funds, however, will depend on many factors, including progress of its discovery programs, the number and breadth of these programs, the ability of the Company to establish and maintain additional strategic alliance and licensing arrangements and the progress of the development and commercialization efforts of the Company's strategic partners. These factors also include the level of the Company's activities relating to its independent discovery programs and to the development and commercialization rights it retains in its strategic 26

alliance arrangements, competing technological and market developments, the costs associated with obtaining access to tissue samples and related information and the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other intellectual property rights. The Company expects that it will require significant additional financings in the future, which it may seek to raise through public or private equity offerings, debt financing or additional strategic alliance and licensing arrangements. No assurance can be given that additional financing or strategic alliance and licensing arrangements will be available when needed, if at all, or that, if available, such financing will be obtained on terms favorable to the Company or its stockholders. To the extent the Company raises additional capital by issuing equity or convertible debt securities, ownership dilution to stockholders will result. If adequate financing is not available when needed, the Company may be required to curtail significantly one or more of its research and development programs or to obtain funds through arrangements with strategic partners or others that may require the Company to relinquish rights to certain of its technologies, discoveries or potential products, or to grant licenses on terms that are not favorable to the Company, any of which could have a material adverse effect on the Company's business, financial condition and results of operations. In the event that adequate funds are not available, the Company's business would be adversely affected. 27

BUSINESS The following Business section contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this Prospectus. OVERVIEW GENE LOGIC INC. ("Gene Logic" or the "Company") uses a proprietary system, based on analysis of gene expression and gene regulation, to discover drug targets and drug leads. Gene Logic uses READS in its drug target and drug lead discovery programs and to generate genomic data for its database products. The Company's objective is to provide its pharmaceutical company partners with novel drug targets, drug leads and a suite of genomic database products to reduce the time, cost and risk associated with drug discovery. The Company believes that by building its portfolio of partnerships it will generate current revenues and establish a long-term economic interest in the product pipleines of multiple partners through milestone and royalty payments. Gene Logic has established major strategic alliances with Procter & Gamble and Japan Tobacco. INDUSTRY BACKGROUND DRUG DISCOVERY AND DEVELOPMENT Diseases are the result of disturbances of, or abnormalities in, the physiological pathways that regulate the functioning of cells in the human body. The main components of these pathways are proteins, such as enzymes, receptors or ion channels, encoded by genes expressed within the cells affected by the disease. Drugs generally exert their therapeutic effects by interacting with certain of these proteins, referred to as drug targets, in such a way as to restore the normal functioning of the disease-affected pathways or otherwise to compensate for the abnormalities. The process of drug discovery involves the screening of collections of compounds against a drug target to identify those compounds which interact with the target to produce the desired effect. In response to increasing competitive pressures to discover and develop new drugs in a more rapid and cost-effective manner, pharmaceutical and biotechnology companies have recently made significant advances in combinatorial chemistry and high-throughput screening technologies which enable the rapid generation and screening of large and diverse compound libraries against many potential targets. However, the current drug discovery process remains time-consuming and costly, in part because of the difficulty and complexity of identifying novel drug targets using traditional methodologies. In general, pharmaceutical companies rely upon their own basic research and academic discoveries to identify drug targets. The Company believes this approach provides an insufficient number of targets to fill the industry's increasing annual screening objectives. Recent developments in genomics have permitted the partial sequencing of tens of thousands of new genes and the identification of the classes of proteins they encode. These developments have not enabled the rapid identification of drug targets, because the gene sequence data by itself provides limited information, if any, about a gene's relationship to a specific disease. There remains a significant need for a rapid and cost-effective method to correlate genes with specific diseases to discover drug targets. GENES, GENE EXPRESSION AND DISEASE The genetic content of humans, the human genome, is maintained in chromosomes, which contain deoxyribonucleic acid ("DNA"). DNA is composed of two strands of four constituent molecules known as bases or nucleotides: adenine (A), thymine (T), guanine (G) and cytosine (C). The specific order, or sequence, of these bases encodes genetic information within units defined as genes, which are the 28

hereditary units that control the structure, health and function of all organisms. The beginning sequence of any gene is called 5 prime (5') and its end is called 3 prime (3'). The human genome is estimated to comprise approximately three billion base pairs encoding 100,000 to 150,000 genes. While all of these genes are present in every human cell, certain of these genes are switched "on" only in specific tissues or only at certain developmental stages and are otherwise inactive. On average, in any single cell type, 10,000 to 20,000 different genes are expressed out of the possible 100,000 to 150,000. The cell's pattern of gene expression defines the function of that cell. Genes consist of coding and non-coding regions which ultimately direct and regulate the production of the various proteins that maintain normal cellular function. The coding regions, which account for less than five percent of the human genome, direct the production of proteins, and the order of the bases in these regions determine the order of amino acids in a given protein. An enzyme reads these genes and makes a strand of RNA (a molecule similar to DNA) that consists of a string of bases complementary to that of the DNA of the gene. This process is known as transcription and results in the production of messenger RNA ("mRNA"). Messenger RNA directs the assembly of amino acids in a sequence that corresponds to the order of the bases of the mRNA defining the sequence of a protein. The amount of mRNA in a cell provides a direct indication of the level of activity of the corresponding gene. Some of the non-coding DNA sequences, referred to as promoter regions, regulate genes in the different tissues. A series of regulatory proteins, called transcription factors, bind to specific promoter regions, either singularly or in unique, multi-component complexes, and act as switches controlling the activity of the genes. The synthesis of regulatory proteins is, in turn, directed by genes coding for transcription factors and their accessory proteins. Together these control elements regulate the pattern of gene expression in specific cells. When a mutation occurs in a gene, the resulting protein may be abnormal in function, resulting in disease. A number of relatively rare diseases, such as cystic fibrosis and sickle cell anemia, result from such single gene mutations, and the genes responsible for many of these monogenic diseases have been identified over the last decade. Detailed knowledge of gene sequences that encode defective proteins may facilitate development of novel therapeutic products and diagnostic tests for these conditions. However, almost all major common diseases, including heart failure, renal disease, diseases of the central nervous system, osteoporosis and cancer, are believed to involve multiple genes and, often, complex interactions of genetic and environmental factors. These conditions evolve over time as a result of successive changes in the patterns of gene expression in the cells involved in the disease. THE NEED FOR NOVEL DRUG TARGETS A critical step for drug development is the identification of suitable drug targets for screening. The major pharmaceutical companies are facing increasing pressures to introduce new drugs more rapidly than in the past. Because most drug candidates fail during the development process, these companies need to identify a large number of potential drug candidates by screening compound libraries against large numbers of targets to improve their chances of identifying commercially viable drugs. Recent estimates suggest that major pharmaceutical companies may have to screen hundreds of new targets each year in order to meet their drug discovery objectives. This figure compares with a published 1995 industry source estimate that approximately 300 targets in total were then in active screening by the pharmaceutical industry. The majority of drug targets are proteins that are encoded by genes expressed within tissues affected by a disease. The importance of certain protein classes, such as enzymes, receptors or ion channels, as targets is illustrated by the world's top selling prescription drugs. Of the 100 most prescribed drugs, approximately 80% interact with one of four classes of proteins: 33 drugs inhibit 13 different enzymes; 22 bind to ten different G-protein-coupled receptors; 13 interact with six different ion channels; and 15 bind to four different nuclear hormone receptors. It is estimated that there are approximately 10,000 different 29

enzymes, 1,000 different G-protein-coupled receptors, 200 different ion channels and 100 different nuclear hormone receptors encoded in the human genome. These proteins are key components of the pathways involved in disease and, therefore, are likely to be a rich source of new drug targets. Proven drug targets share certain other characteristics which can only be identified by understanding their expression levels in cells and cannot be determined by their gene sequence alone. Drug targets are (i) often expressed primarily in specific tissues, allowing for selectivity of pharmacological action and reducing the potential for adverse side effects and (ii) generally expressed at low abundance in the cells of the relevant organ. An effective target discovery system would therefore enable the detection of genes that encode for proteins expressed in specific tissues at low abundance, thereby permitting the rapid identification of proteins which are likely to be targets for therapeutic and diagnostic development. LIMITATIONS OF TRADITIONAL GENOMICS TECHNOLOGIES Although traditional genomics technologies have yielded sequence information for many genes and have succeeded in identifying genes that predispose individuals to certain diseases, the rate at which novel drug targets can be identified from this information is limited. Traditional genomics efforts are generally classified in two categories: gene sequencing and positional cloning. Most gene sequencing approaches use high-throughput methods to capture partial sequences (known as expressed sequence tags or "ESTs") for many genes on an essentially random basis. These ESTs are stored in public and proprietary databases which, to date, contain an estimated three million ESTs, representing partial and fragmentary sequence data for 50 to 60 percent of human genes. Despite the widespread availability of a significant amount of sequence data, these data have limited use in identifying targets for therapeutic or diagnostic product development. This is because the gene sequence data by itself provides limited information, if any, about a gene's relationship to a specific disease. Also, the EST sequencing approach tends to capture, multiple times, those genes which are abundantly expressed while missing the low-abundance, tissue-specific genes which may code for useful drug targets. Positional cloning is a method of identifying individual genes that, when defective, cause or predispose individuals to particular diseases. The process consists of genetic mapping, physical mapping and sequencing, and typically requires an extensive collection of DNA samples from families affected by the disease. Scientists test the DNA of both affected and non-affected members of these families and, through statistical analysis, attempt to identify the region or regions of the genome likely to contain a gene related to the disease. Positional cloning requires large numbers of samples from the affected families to demonstrate statistical significance and becomes much more complicated when multiple genes are involved in the disease. The accumulation of such samples is costly and time consuming. Although researchers are attempting to use other methodologies, including animal models of disease, to speed the process of gene discovery, the overall process may take several years. THE GENE LOGIC SOLUTION Gene Logic believes that its proprietary technologies for analysis of the overall patterns of gene expression and regulation in specific diseases will enable the Company to identify multiple, novel drug targets more rapidly than competing technologies. Gene Logic's ACCELERATED DRUG DISCOVERY system allows the Company to display the changes in gene expression patterns as a disease develops and progresses. The Company uses this information, in conjunction with its proprietary suite of genomics databases and bioinformatics tools, to identify genes and their associated pathways implicated in disease and to discover and prioritize individual drug targets. Pursuant to strategic alliances with corporate partners and in independent programs, the Company is using its system to identify drug targets for major common diseases, including heart failure, renal disease, diseases of the central nervous system, osteoporosis and prostate cancer. In addition, Gene Logic is developing a proprietary, reusable Flow-thru Chip for high-throughput analysis of changes in the expression of known genes. The Company believes the Flow-thru 30

Chip will enable the development of high-throughput screening assays to evaluate the effects of compounds on the expression of disease-associated genes identified by READS. This technology represents a new approach to drug discovery and has the potential to accelerate substantially the identification of drug leads. By utilizing and further developing the portfolio of technologies, genomics databases and bioinformatics tools in its ACCELERATED DRUG DISCOVERY system, Gene Logic believes it can significantly enhance many critical steps in the drug development process and accelerate the development of novel pharmaceuticals for the Company and its partners. GENE LOGIC'S STRATEGY Gene Logic's objective is to provide to its pharmaceutical company partners novel drug targets, drug leads and a suite of genomic database products in order to reduce the time, cost and risk associated with drug discovery. The Company believes that by building its portfolio of partnerships it will generate current revenues and establish a long-term economic interest in the product pipelines of multiple partners through milestone and royalty payments. The Company believes that this portfolio approach will maximize the likelihood of drugs being discovered and developed using its system. The Company's strategy for building commercial value is to: - PROVIDE AN INTEGRATED DRUG DISCOVERY PLATFORM. The Company has established and intends to continue to build a broad technology platform, the ACCELERATED DRUG DISCOVERY system, based on the analysis of gene expression and gene regulation for the rapid discovery of multiple, screenable drug targets and drug leads. The ACCELERATED DRUG DISCOVERY system is designed to be integrated easily into the current drug discovery processes of multiple partners. - ESTABLISH DISEASE-SPECIFIC DRUG TARGET AND LEAD DISCOVERY ALLIANCES. Gene Logic intends to continue to establish strategic alliances in specific disease areas with pharmaceutical companies for drug target and drug lead discovery programs. Such strategic alliances would generally provide the Company technology license fees, research funding, milestone payments and royalty or profit-sharing income from commercialization of products resulting from the alliances. To date, Gene Logic has entered into a target discovery alliance with Procter & Gamble in the field of heart failure and a target and lead discovery alliance with Japan Tobacco in the field of renal disease. - ESTABLISH INDEPENDENT DRUG TARGET AND LEAD DISCOVERY PROGRAMS. Gene Logic has established and intends to expand independent drug discovery programs based on its proprietary technologies, including the Flow-thru Chip. The Company plans to license drug leads discovered through its independent programs to pharmaceutical companies for clinical development and commercialization and expects to receive license fees, development milestone payments and royalty or profit-sharing income from such licensees. - MARKET GENOMIC DATABASE PRODUCTS UNDER NON-EXCLUSIVE LICENSE. The Company plans to market its suite of genomic database products, including its GENE EXPRESS NORMAL and rare EST (rEST) databases, either in a single package or as separate modules, to multiple pharmaceutical company partners. The Company intends to grant non-exclusive licenses independent of, or in conjunction with, strategic alliances. Such licenses would generally provide the Company annual subscription fees, milestone payments and royalties. To date, Gene Logic has granted Japan Tobacco a non-exclusive license to its GENE EXPRESS NORMAL database. - RETAIN SIGNIFICANT RIGHTS TO NEW PRODUCT OPPORTUNITIES. Under its strategic alliances, Gene Logic retains certain rights to diagnostic, therapeutic protein and gene therapy applications. In addition, the Company intends to use its databases and technological capabilities to develop products for the evolving fields of differential diagnosis, molecular staging of disease and pharmacogenomic profiling. The Company may pursue these applications independently or in alliances with additional partners. 31

GENE LOGIC'S ACCELERATED DRUG DISCOVERY SYSTEM Gene Logic is employing its proprietary technologies and bioinformatics system for the discovery of drug targets and drug leads and to accelerate the development of drugs. The elements of Gene Logic's ACCELERATED DRUG DISCOVERY system include: ANALYSIS OF GENE EXPRESSION AND REGULATION READS TECHNOLOGY The Company has developed a proprietary, automated technology, known as READS (Restriction Enzyme Analysis of Differentially-expressed Sequences), for capturing and analyzing the overall gene expression profile of a given cell or tissue type to identify drug targets. The Company has an exclusive license from Yale University to patent applications covering the READS technology and has received a notice of allowance for the original patent application, covering the key aspects of the READS technology, from the United States Patent and Trademark Office (the "USPTO"). Using READS, Gene Logic rapidly generates a gene expression profile, or Molecular Topography, representing a quantitative snapshot of the levels of expression of essentially all the genes in a tissue sample. The Company compares normal and diseased tissues through a series of Molecular Topography snapshots, a "molecular movie," to identify the changes in gene expression patterns that occur as the disease develops and progresses and to determine which genes are associated with the disease. The READS technology is accurate and highly sensitive, capable of detecting essentially all mRNA transcripts including rarely expressed genes, at the level of approximately one mRNA copy per cell. By employing its READS technology in conjunction with its proprietary bioinformatics system, the Company can then prioritize the proteins encoded by these disease-associated genes as potential drug targets. The READS process begins with the procurement of a relevant cell or tissue sample, extraction of its total RNA content and preparation of complementary DNA ("cDNA") using standard techniques. By applying proprietary tagging and enzyme cleavage procedures to the cDNA pool, the Company generates a unique set of identifiable signature fragments (3' ESTs) for each mRNA species present in the cell. The fragments are separated by size using gel-based, automated separation techniques and quantified using proprietary image analysis software. The quantity of each signature fragment correlates directly with the expression levels of the corresponding gene. The Company uses its bioinformatics system to compile these data into a Molecular Topography snapshot which represents the levels of expression of genes active in the sample. This process typically takes two days and is tracked by the Company's laboratory information management system, which captures both process and quality control data. The READS technology has been highly automated through the use of commercially available robotic liquid handling stations, thermocyclers and fragment separation instruments. A single production unit may be utilized for two shifts per day and is capable of generating approximately 1,000 Molecular Topography snapshots per year. Gene Logic has installed its first production unit and has scaled up operations to two shifts per day. The Company expects to install a second production unit during 1998. There can be no assurance, however, that the Company will be able to increase its capacity as expected or to realize the cost efficiencies of scale it anticipates. MUST TECHNOLOGY Gene Logic's proprietary MuST (Multiplex Selection of Transcription Factors) technology enables the Company to identify the nucleotide sequences of the transcription factors binding sites through which the expression of genes is regulated. The Company believes that the information generated by MuST, in combination with the information on gene expression levels generated by its READS technology, will enable the Company to assign genes to functional pathways based on the observation that genes in such pathways share common regulatory mechanisms and are coordinately expressed. The Company has an exclusive license from Yale University to patent applications covering the MuST technology and has 32

received a notice of allowance for the original patent application, covering the key aspects of the MuST technology, from the USPTO. The MuST process starts with the extraction of nuclear proteins in the cell or tissue sample. Proteins within this extract which exhibit sequence-specific DNA binding properties are bound to a set of DNA probes and separated from all unbound probes using electrophoretic separation techniques. After purification and amplification, the binding sites are sequenced and entered into a database. The result is a library of sequences which represent the binding sites for the gene regulatory proteins contained in the original nuclear extract. The entire process is tracked by the Company's laboratory information management system, which captures both process and quality control data. The Company has established the technical resources to construct a library of transcription factor binding sequences for any given cell type in a period of four weeks and has begun to process samples in order to expand the database. Over 50% of the transcription factor binding sequences Gene Logic has identified to date in a variety of different human cell types are not included in public domain databases. GENE LOGIC'S BIOINFORMATICS SYSTEM The Company has designed and is continuing to develop a bioinformatics system to manage and analyze the information it generates and to interface with its databases, its partners' databases and databases in the public domain. This system enables the functional integration of Gene Logic's genomic data content with other proprietary or public genomic databases, protein databases and strategic partners' chemical, screening and assay databases. Gene Logic's bioinformatics system provides the analytical tools necessary to enable the Company to discover and prioritize targets for drug discovery. Moreover, the provision of Gene Logic's proprietary genomic data in conjunction with its integrated bioinformatics system may enable the Company to introduce that system into strategic partners' drug discovery process in a customized, expandable format that is compatible with partners' current database architectures. DATABASE INTEGRATION TOOLS The Company's bioinformatics system was developed using scientific data management tools based on the Object Protocol Model ("OPM") architecture. These tools provide support for the rapid development of relational databases, the integration of relational and flat file databases and the building of cross- database query systems. The Company's bioinformatics system works through customized and configurable Web interfaces, regardless of the structure of the underlying databases and without having to redevelop each database. The Company's bioinformatics system enables the integration of Gene Logic's information content into the data management systems of its strategic partners, and the Company believes that the system will also enhance the value of such partners' existing databases by establishing interconnectivity of heterogeneous data sources. GENOMIC DATA ANALYTICAL TOOLS The Company's bioinformatics system includes tools for the analysis of data generated by READS and MuST for both normal and diseased cell and tissue types. Gene expression data are analyzed using the Company's proprietary Molecular Topography data tool. The tool allows intuitive "point and click" navigation among the expressed genes and is also an analytical tool. The system can identify genes as known (represented in the Company's databases of indexed 3' ESTs and full-length sequences) or unknown, and provides a wide variety of statistical analyses of expression levels and correlations both within and across cell, tissue and disease types. Underlying the Molecular Topography tool is the quEST software developed by the Company. quEST comprises a reference set of indexed, human 3' ESTs, representing the Company's universe of known genes. The Company processes these ESTs to eliminate artifacts and redundancies which are commonly found in the public data. The quEST tool also includes a searching and matching algorithm which allows 3' 33

EST signature fragments from READS to be correlated with known genes. The Company routinely sequences signature fragments which are not in its databases as they are identified by READS and is capable of sequencing over 1,000 such fragments per week. Once the sequence of a gene is captured in the Company's database, a fragment derived from that gene can thereafter be identified in a Molecular Topography without the need for further sequencing. Gene Logic has also developed proprietary methods to prioritize the disease-associated genes it discovers as potential drug targets. This prioritization depends upon a number of factors including: (i) a gene's temporal association with the disease process; (ii) the tissue distribution of its expression; (iii) any homology it may have with known target classes, such as membrane receptors, enzymes or signaling proteins; (iv) its involvement in known metabolic or signal transduction pathways; and (v) the feasibility of developing a screening assay. THE FLOW-THRU CHIP Gene Logic is developing its proprietary, reusable Flow-thru Chip for high-throughput analysis of changes in the expression of known genes. The Company believes that the Flow-thru Chip will enable the development of high-throughput screening assays to evaluate the effects of compounds on the expression of disease associated genes identified by READS. This technology represents a new approach to drug discovery and has the potential to accelerate substantially the identification of drug leads. The Company has exclusive licenses to the technology underlying the Flow-thru Chip from the United States Department of Energy and the inventor of the technology. In its drug discovery process, Gene Logic will use its READS technology to identify which genes are associated with the disease. Once these genes are known, the Company will design a customized Flow-thru Chip incorporating probes specific for these genes and use the chip to test the effects of compounds in cellular assays. Compounds that have the desired effect on expression of the relevant genes, such as restoring the expression pattern to normal or mimicking the effect of a known therapeutic, may be evaluated as drug leads. The substrate of the Flow-thru Chip is a silicon or glass wafer traversed by a grid of micro-channels. The current version of the chip is laid out in a format which is compatible with current high-throughput cellular assay systems. Each well is configured to contain an array of approximately 400 genes identified using the Company's READS technology; the number of genes included in each well is expected to be increased to approximately 1,000 in the second version of the Flow-thru Chip. The Company expects to commence in-house testing during 1998. Based on disease-associated genes identified by READS, Gene Logic designs and synthesizes custom oligonucleotide probes and binds them, using a proprietary covalent attachment chemistry, within the micro-channels covering a specific area of the chip. The function of each probe is to bind to its complementary DNA or RNA in the sample being analyzed. The nucleic acid is isolated from such a sample and fluorescently labeled by one of several standard biochemical methods. The test sample is then flowed through the substrate of the Flow-thru Chip where each attached probe captures, or hybridizes to, any labeled nucleic acid present in the sample which is complementary to that probe. When imaged using the Company's signal detection system, the hybridized test sample generates a fluorescent signal which can be correlated with the expression in the original sample of the gene captured by the probe because the sequence and position of each complementary DNA probe on the Flow-thru Chip is known. The level of signal is readily quantifiable and reflects the degree to which the gene is expressed in the sample. 34

FLOW-THRU CHIP-TM[graphical depiction of cross-sections of Flow-thru Chip] Cut-away of a micro-channel containing covalent linked oligonucleotide probes. Area of chip containing probes for a single gene. Portion of one cm2 chip with 400 sites containing probes for individual genes. Each high-throughput screening assay comprises 96 wells, each containing the full 400 gene set. The Company believes that several features make the Flow-thru Chip well suited for monitoring the expression of known genes in high-throughput cellular assays: - SENSITIVITY. Because of the greater surface area available for attachment of the oligonucleotide probes, the Company believes the Flow-thru Chip will be sensitive enough to monitor changes in expression of low-abundance transcripts. - SPEED. The existence of the micro-channels accelerates the hybridization reaction, reducing the time required for each assay. In addition, because of focusing of the fluorescent signal by the walls of the micro-channels, the Company is able to use a commercially available digital signal detection system which provides an immediate read-out. - COST. As a result of the proprietary covalent chemistry through which the oligonucleotide probes are attached within the micro-channels, each Flow-thru Chip can be used multiple times. Following each assay the chip is washed to remove the hybridized material and is then ready for reuse. The Company believes the reusability of the Flow-thru Chip will make it suitable for use in high- throughput screening applications. In addition to its use as part of the Company's drug lead discovery programs, the Flow-thru Chip will also serve as a platform for the screening of lead compounds against the data in the Toxicology EXPRESS and Pharmacology EXPRESS databases being developed by the Company. Gene Logic will design Flow-thru Chips using oligonucleotide probes representative of the genes that comprise patterns of gene expression which typify known classes of toxic or pharmacological effects identified using READS. The Company may sell Flow-thru Chips to its strategic partners in conjunction with subscriptions to the Toxicology EXPRESS or Pharmacology EXPRESS databases or provide screening services in conjunction with an alliance. 35

The Company has established relationships with several third parties for manufacture of the chip substrates and oligonucleotide probes which constitute its Flow-thru Chip arrays and for the robotic and signal detection systems associated with running high-throughput screening assays using the chips. There can be no assurance, however, that the Company will be able to maintain such relationships on terms acceptable to the Company. There can be no assurance that further development and scale-up of the Flow-thru Chip will be successful or that the Company will be successful in marketing the Flow-thru Chip to strategic partners or others. GENE LOGIC PROGRAMS AND PRODUCTS DRUG TARGET AND LEAD DISCOVERY PROGRAMS The ACCELERATED DRUG DISCOVERY system is applicable to a broad range of diseases. As part of its business strategy, Gene Logic focuses on large medical markets that are poorly served by current drug treatments and intends to establish strategic alliances in specific disease areas with pharmaceutical companies for drug target and drug lead discovery programs. To date, the Company has established two strategic alliances in the fields of heart failure and renal disease. Gene Logic has established independent discovery programs to identify drug targets for certain diseases of the central nervous system, osteoporosis and prostate cancer. Gene Logic also intends to obtain access to compound libraries from combinatorial chemistry and pharmaceutical companies for screening using its Flow-thru Chip. Gene Logic has collaborations with academic institutions and commercial organizations for access to relevant normal and diseased human tissues and cell types and animal disease models. The Company uses these tissues for analysis of gene expression and gene regulation and to build its genomic databases. Under the terms of these agreements, the Company generally retains all commercial rights to gene discoveries made through the use of cells and tissues provided by its collaborators. HEART FAILURE An estimated 4.8 million Americans suffer from heart failure. Heart failure refers to a progressive reduction in the ability of the ventricles of the heart to pump an adequate volume of blood. Although many causes for heart failure have been identified, common to all is loss of the normal ability of the cells comprising heart muscle to respond to stress. Normally, muscle becomes stronger with exercise; in heart failure, increasing load on the heart muscle weakens rather than strengthens the muscle. Better knowledge of altered patterns of gene expression in the heart muscle cells as the disease progresses may offer insight into the disease mechanism. In May 1997, Gene Logic entered into a 4 1/2-year strategic alliance with Procter & Gamble for the discovery of drug targets for heart failure. In connection with this alliance, the Company has obtained access to muscle tissue from normal and failing human hearts through several heart transplant programs. Pursuant to the alliance research program, Gene Logic is using READS to identify changes in the expression of genes which underlie the pathological process to prioritize targets for the development of innovative drugs and prognostic indicators. The Company has processed samples and generated Molecular Topography snapshots for samples received to date from Procter & Gamble and is providing Procter & Gamble with on-line access to such results. See "--Strategic Alliances--Procter & Gamble Pharmaceuticals, Inc." RENAL DISEASE Approximately 200,000 Americans suffer from end-stage renal disease. The management of chronic renal failure consumes a significant portion of the health care budget in the United States. The major causes of renal failure are glomerulonephritis, diabetes mellitus and hypertension. 36

In September 1997, the Company entered into a five-year strategic alliance with Japan Tobacco for the discovery of drug targets and drug leads for renal disease. As part of the alliance, the Company granted Japan Tobacco a non-exclusive license to the GENE EXPRESS NORMAL database and Gene Logic may also use its Flow-thru Chip technology for screening for drug leads in renal disease. Pursuant to the alliance, Gene Logic is establishing collaborations for access to a broad range of human tissues and animal disease models relevant to renal disease. The Company is focusing its ACCELERATED DRUG DISCOVERY system on the identification of drug targets and leads for the development of novel therapeutics and diagnostic and molecular staging products for renal disease. See "--Strategic Alliances--Japan Tobacco Inc." DISEASES OF THE CENTRAL NERVOUS SYSTEM Gene Logic is employing its ACCELERATED DRUG DISCOVERY system to identify drug targets for schizophrenia, affective disorders and Alzheimer's disease. SCHIZOPHRENIA. Schizophrenia is a severe mental disorder affecting approximately one percent of the worldwide population. Current treatments for schizophrenia are inadequate because a significant percentage of schizophrenics are resistant to all treatments and others respond only partially to drug therapy and remain too affected to work or lead normal lives. The underlying chemical alterations in the brain which cause schizophrenia are not well understood. Gene Logic is analyzing the patterns of gene expression in brain cells from schizophrenics and animal treatment models to identify novel drug targets. Gene Logic has entered into a collaboration with Johns Hopkins University School of Medicine for access to POST MORTEM tissue samples from brains of schizophrenics. These samples were obtained from both drug-treated and untreated individuals shortly after death. The Company has also begun evaluating the effects of established and experimental antipsychotic drugs on gene expression in the brain in animal models. AFFECTIVE DISORDERS. There are two broad categories of affective disorders: unipolar affective disorder, or depression, which affects an estimated 15 million Americans, and bipolar affective disorder, also known as manic-depression, which affects an estimated two million people in the United States. Although drug therapies exist for these disorders, pharmaceutical companies are attempting to develop new products having a more rapid onset of action and efficacy in a higher percentage of patients. The Company is using READS to discover new antidepressant drug targets based on changes in the patterns of gene expression in brain cells from patients with affective disorders. The Company has entered into a collaboration with Johns Hopkins University School of Medicine for access to POST MORTEM samples from specific regions of the brains of both drug-treated and untreated manic-depressives. ALZHEIMER'S DISEASE. Between three and four million Americans suffer from disabling age-related dementia, or Alzheimer's disease. The primary therapeutic goal is postponement of the onset of disease in predisposed individuals and slowing of disease progression. Gene Logic has entered into a collaboration with Molecular Geriatrics Corporation for access to micro-dissected samples of relevant regions of human brain from patients with Alzheimer's disease ranging from early stage through advanced degeneration. The samples have been characterized using proprietary monoclonal antibodies to reveal cells affected at the onset of the disease. The Company has exclusive rights to any genes useful in the development of therapeutic products which are identified through the collaboration. The Company may pursue such rights independently or in alliance with a strategic partner. Molecular Geriatrics Corporation retains rights to develop diagnostic products. OSTEOPOROSIS Osteoporosis is a condition characterised by low bone mass and susceptibility to fracture. Osteoporosis affects over 20 million American women, a number which continues to grow as the average age of the population increases. Loss of bone mass in postmenopausal women can be substantially retarded or 37

prevented by hormone replacement therapy. However, there is no available treatment that significantly restores bone mass that has already been lost. Because effective prevention requires early diagnosis, there is also a large and immediate market for more sensitive diagnostics. Gene Logic has commenced its discovery program in osteoporosis with the Center for Clinical and Basic Research and Johns Hopkins University School of Medicine providing normal and osteoporotic bone samples. The Company intends to develop drug targets identified through these programs independently or in alliance with a strategic partner. PROSTATE CANCER Prostate cancer is the most commonly diagnosed cancer in American men with 317,000 new cases reported in 1996 and is the second leading cause of all male cancer deaths in the United States. Gene Logic has established a collaboration for access to staged and characterized prostate cancer tissue samples, together with related clinical treatment and outcomes data, with Baylor College of Medicine. In this program, the Company is focusing on the identification of targets for the development of novel therapeutics and diagnostic products. Gene Logic may develop these independently or in alliance with strategic partners. GENOMIC DATABASE PRODUCTS Complementary to its disease-specific target discovery programs, the Company is developing a suite of genomic database products designed to accelerate the process of target identification and prioritization, the discovery of lead compounds and the preclinical and clinical development of drugs. Gene Logic intends to market its suite of genomic database products, in a single package or as separate modules, to multiple partners on a non-exclusive basis both independent of and in conjunction with drug target and drug lead discovery alliances. The Company expects to receive annual database access subscription fees, milestone payments based on utilization of the data in licensees' drug and diagnostic discovery programs and royalties on net sales of resulting products. GENE EXPRESS NORMAL DATABASE The GENE EXPRESS NORMAL database is a reference set of gene expression profiles for a wide variety of normal human tissues, which enables the Company and its partners to determine rapidly the expression level of genes in normal tissues. The database will also contain gene expression profiles for normal tissues in rat and mouse, the experimental animals most commonly used by the pharmaceutical industry. This information facilitates the prioritization of drug targets. The database uses the Company's bioinformatics system to correlate specific gene sequences to their expression levels and to interface with other public or private sequence databases to which the licensee may have access. The Company has granted the first non-exclusive license to the GENE EXPRESS NORMAL database to Japan Tobacco. RARE EST (REST) DATABASE Approximately 80% of all human genes are rarely expressed (at the level of fewer than five mRNA copies per cell), and fewer than an estimated 50% of such genes are available in existing human EST databases. However, these low-abundance, tissue-specific gene transcripts are those that the Company believes will be most promising as drug targets. Gene Logic uses its READS technology on tissue samples to identify rarely expressed genes. Unlike traditional EST sequencing methods, Gene Logic's process is directed (non-random) and has a low level of redundancy. The Company is developing a database of rare ESTs, with the potential to provide promising drug targets not otherwise available through other sources of sequence data. The Company anticipates that such database will be commercially available in 1998, but there can be no assurance that it will be available by such date, or at all. 38

THE ANNOTATED GENOME (TAG) DATABASE The Human Genome Project is forecast to complete the sequencing of the entire genome by 2005. Using expression data derived from the GENE EXPRESS NORMAL database and the transcription factor binding site sequence information generated by the Company's MuST technology, Gene Logic intends to create a database, the TAG database, of human genomic sequence information derived from the Human Genome Project annotated with expression levels, tissue distribution of expression and gene regulatory mechanisms. The Company believes the analysis of this database will enable genes to be placed in their functional pathways based upon coordinate expression and shared transcriptional control elements, thereby allowing the selection and prioritization of appropriate drug targets at multiple points along disease-associated pathways. The development of the TAG database is at an early stage and Gene Logic expects that it will accelerate as more human genomic sequence data becomes available. PHARMACOLOGY EXPRESS DATABASE The Company is using its READS technology to build a database of profiles of gene expression that characterize the pharmacological effects in relevant target organs of compounds of known therapeutic benefit. These patterns can be used as references for the screening of new lead compounds in order to predict therapeutic efficacy at the preclinical development stage. The Company believes that this technology may substantially reduce the risks associated with clinical development of new drugs and provide a rapid filter for the selection and prioritization of lead compounds. In conjunction with its Pharmacology EXPRESS database, Gene Logic plans to use its Flow-thru Chip for the screening of lead compounds against the database. The construction of the Pharmacology EXPRESS database is at an early stage. The Company anticipates that such database will be commercially available in 1998, but there can be no assurance that it will be available by such date, or at all. TOXICOLOGY EXPRESS DATABASE Gene Logic intends to use its READS technology to build a database of the changes in gene expression that typify known toxicological effects of compounds in the target organs subject to such effects. Patterns may be identified by comparing gene expression in normal tissues to gene expression in similar tissues exposed to known toxic substances. These patterns can be used as references for the screening of new lead compounds for common classes of toxicological effects in order to minimize the use of traditional animal toxicology screening, which is both time-consuming and expensive. In conjunction with the Toxicology EXPRESS database, Gene Logic plans to use its Flow-thru Chip for the screening of lead compounds against the database. The Company believes that screening against the Toxicology EXPRESS database will provide a filter for the prioritization of lead compounds and will accelerate the selection of those to be taken forward through full toxicological studies in animals and those to be abandoned. The construction of the Toxicology EXPRESS database is at an early stage. The Company anticipates that such database will be commercially available in 1998, but there can be no assurance that it will be available by such date, or at all. The statements made in this Prospectus regarding anticipated dates for commercial availability of certain of its products are forward-looking statements, and the actual dates of commercialization could differ materially from those projected as a result of a variety of factors, including progress of the Company's technologies, changes in the Company's business priorities and other factors discussed in "Risk Factors." There can be no assurance that the Company will not experience difficulties that could delay or prevent the successful development and commercialization of products or that the Company's products will address the requirements of the market or achieve market acceptance. 39

NEW PRODUCT OPPORTUNITIES Gene Logic intends to pursue commercial opportunities for diagnostic applications of its discoveries, including molecular staging of disease, differential diagnosis and pharmacogenomic profiling. The Company believes that management of common diseases in the future will include gene expression-based diagnostics to monitor the molecular evolution of the disease. Gene expression analysis may enable differentiation among diseases which share clinical symptoms but which differ at the level of molecular mechanism. Gene Logic believes that pharmacogenomic profiling, using gene expression-based assays to predict an individual's response to specific drugs, may be especially valuable in new drug development and in modifying drug therapies of known efficacy but which have toxic side effects in certain groups of patients. STRATEGIC ALLIANCES As part of its business strategy, Gene Logic intends to continue to establish strategic alliances for drug target and lead discovery programs in specific disease areas with pharmaceutical companies. Gene Logic may also enter into strategic alliances or joint ventures with additional partners to develop certain diagnostics, therapeutic proteins and gene therapy products for which it has retained rights. The Company's strategic alliances would generally provide for the Company to receive technology license fees, research funding, milestone payments and royalty or profit-sharing income. To date, Gene Logic has entered into a target discovery alliance with Procter & Gamble in the field of heart failure and a target and lead discovery alliance with Japan Tobacco in the field of renal disease. Gene Logic's objective is to structure its alliances in a flexible manner. Subject to a commitment by a strategic partner, the Company is able to allocate a variable portion of its production capacity to any individual program. An alliance might embrace a field as restricted as one specific project within a single disease indication or as broad as an entire category of disease involving several indications. PROCTER & GAMBLE PHARMACEUTICALS, INC. In May 1997, the Company and Procter & Gamble entered into a 4 1/2-year strategic alliance for drug target discovery in heart failure. Payments by Procter & Gamble to the Company in the form of committed technology access fees and research funding will total a minimum of $10.1 million if the research program continues for its full term and the Company performs its research obligations under the agreement. The parties may agree to extend the research program for additional one-year periods. At any time during the first 18 months of the alliance, Procter & Gamble has the right to expand the alliance to include drug target discovery programs in two additional disease indications upon terms, including committed research funding, identical to those covering the initial program in heart failure. Procter & Gamble will be obligated to make additional payments to the Company for the achievement of specified target discovery, product development and associated regulatory milestones. Procter & Gamble will also pay the Company royalties on worldwide net sales of all products that may result from the alliance. The agreement provides Procter & Gamble with exclusive, worldwide, royalty-bearing rights to develop and commercialize small molecule therapeutics, therapeutic proteins and diagnostics based on the Company's discoveries in the field of heart failure. Gene Logic has retained all rights to develop and commercialize products discovered pursuant to the alliance outside of the alliance field. Procter & Gamble has agreed to assign to Gene Logic any and all interest it may have in inventions related to the Company's core technologies and to products developed pursuant to the alliance to the extent necessary for Gene Logic to exercise its retained commercial rights. Procter & Gamble has the right to terminate the research program with respect to heart failure by giving Gene Logic six months notice at any time after 12 months from the date of commencement of the research program under the agreement and has comparable rights to terminate the research program in the options fields. Accordingly, the minimum duration of any research program is 18 months. If Procter & Gamble terminates the agreement, it may elect to recommence the research program for up to two 40

additional years. Each party also has the right to terminate the agreement upon certain change of control events with respect to the other party. Unless earlier terminated in accordance with its terms, the agreement will remain in effect until the expiration of the last-to-expire obligations of Procter & Gamble to pay royalties under the agreement. There can be no assurance that the Company's research pursuant to the agreement will be successful in discovering drug targets related to heart failure or to either of the two option disease fields or that Procter & Gamble will be successful in developing or commercializing any products based upon such discoveries made by the Company. As a result, there can be no assurance that Gene Logic will receive any milestone payments, royalties or other payments contemplated by the agreement. JAPAN TOBACCO INC. In September 1997, the Company and Japan Tobacco entered into a five-year strategic alliance for drug target and drug lead discovery in renal disease. Payments by Japan Tobacco to the Company in the form of committed technology access fees and research funding total a minimum of $15.0 million if the research program continues for its full term and the Company performs its research obligations under the Agreement. Japan Tobacco may extend the research program for one additional year. At any time during the first two years of the alliance, Japan Tobacco has the right to expand the alliance to include drug target and drug lead discovery programs in two additional disease indications upon terms, including committed research funding, identical to those covering the initial program in renal disease. Japan Tobacco will be obligated to make additional payments to the Company for the achievement of specified target discovery and related product development and associated regulatory milestones. Pursuant to the terms of the agreement, Japan Tobacco would pay a minimum of $12.5 million for each therapeutic product if all milestones are achieved. Japan Tobacco will also pay the Company royalties on worldwide net sales of all products that may result from targets discovered pursuant to the alliance. As part of the alliance and during the research term of the alliance agreement, the Company granted Japan Tobacco a non-exclusive license to the GENE EXPRESS NORMAL database, and Gene Logic intends to use its Flow-thru Chip technology for screening for drug leads in renal disease or, if Japan Tobacco has exercised its options to additional disease indications, such other disease indications. In consideration for such license and access, Japan Tobacco has agreed to purchase $3.0 million of Common Stock in a private transaction concurrent with this offering at a price per share equal to the price per share at which Common Stock is sold in this offering. Under the terms of the option, Japan Tobacco will pay Gene Logic chip design fees, screening fees and a minimum of $17.5 million for each therapeutic product based on a lead compound identified through such assays if all milestones are achieved. The agreement also entitles the Company to royalties on net sales of therapeutic products based on lead compounds identified through such assays. The agreement provides Japan Tobacco with exclusive, worldwide, royalty-bearing rights to develop and commercialize small molecule therapeutics and therapeutic antibodies and proteins based on the Company's discoveries in the course of the alliance. Gene Logic has retained all rights to develop and commercialize gene therapy and antisense drugs and diagnostic products discovered pursuant to the alliance. Japan Tobacco has agreed to assign to Gene Logic any and all interest it may have in inventions related to the Company's core technologies and to products developed pursuant to the alliance to the extent necessary for Gene Logic to exercise its retained commercial rights. Japan Tobacco has the right to terminate the research program with respect to renal disease by giving Gene Logic six months notice at any time after 12 months from the date of commencement of the research program under the agreement and has comparable rights to terminate the research program in the option fields. Accordingly, the minimum duration of any research program is 18 months. Unless earlier terminated in accordance with its terms, the agreement will remain in effect until the expiration of the last-to-expire obligations of Japan Tobacco to pay royalties under the agreement. 41

There can be no assurance that the Company's research pursuant to the agreement will be successful in discovering drug targets or drug leads related to renal disease or to either of the two option disease fields or that Japan Tobacco will be successful in developing or commercializing any products based upon such discoveries made by the Company. As a result, there can be no assurance that Gene Logic will receive any milestone payments, royalties or other payments contemplated by the agreement. INTELLECTUAL PROPERTY Gene Logic seeks United States and international patent protection for major components of its technology platform, including elements of its READS, MuST, Flow-thru Chip and bioinformatics technologies; it relies upon trade secret protection for certain of its confidential and proprietary information; and it uses license agreements both to access external technologies and assets and to convey certain intellectual property rights to others. The Company's commercial success will be dependent in part upon its ability to obtain commercially valuable patent claims and to protect its intellectual property portfolio. As of September 30, 1997, the Company had exclusive rights to eight United States patent applications, as well as corresponding international and foreign patent applications, relating to its technologies. The Company has received notices of allowance for two United States patent applications covering the key aspects of the READS and MuST technologies, however, no patents have issued to date. The patent positions of pharmaceutical, biopharmaceutical and biotechnology companies, including Gene Logic, are generally uncertain and involve complex legal and factual questions. There can be no assurance that any of the pending patent applications to which the Company has exclusive rights will result in issued patents, that the claims of any patents which do issue will provide meaningful protection, that the Company will develop additional proprietary technologies that are patentable, that any patents licensed or issued to the Company or its strategic partners will provide a basis for commercially viable products or will provide the Company with any competitive advantages or will not be challenged by third parties, or that the patents of others will not have an adverse effect on the ability of the Company to do business. In addition, patent law relating to the scope of claims in the technology field in which the Company operates is still evolving. The degree of future protection for the Company's proprietary rights, therefore, is uncertain. Furthermore, there can be no assurance that others will not independently develop similar or alternative technologies, duplicate any of the Company's technologies, or, if patents are licensed or issued to the Company, design around the patented technologies licensed to or developed by the Company. In addition, the Company could incur substantial costs in litigation if it is required to defend itself in patent suits brought by third parties or if it initiates such suits. The Company is aware of a number of United States patents and patent applications and corresponding foreign patents and patent applications owned by third parties relating to the analysis of gene expression or the manufacture and use of DNA chips. There can be no assurance that these or other technologies will not provide third parties with competitive advantages over the Company and will not have a material adverse effect on the Company's business, financial condition and results of operations. In addition, certain third party patent applications contain broad claims, and it is not possible to determine whether or not such claims will be narrowed during prosecution and/or will be allowed and issued as patents, even if such claims appear to cover the prior art or have other defects. There can be no assurance that an owner or licensee of a patent in the field will not threaten or file an infringement action or that the Company would prevail in any such action. There can be no assurance that the cost of defending an infringement action would not be substantial and would not have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, there can be no assurance that any required licenses would be made available on commercially viable terms, if at all. Failure to obtain any required license could prevent the Company from utilizing or commercializing one or more of its technologies and could have a material adverse effect on the Company's business, financial condition and results of operations. 42

In general, the Company intends to apply for patent protection for methods relating to gene expression and to apply for patent protection for the individual disease genes and targets it discovers. Such patents may include claims relating to novel genes and gene fragments and to novel uses for known genes or gene fragments identified through its discovery programs. There can be no assurance that the Company will be able to obtain meaningful patent protection for its discoveries; even if patents are issued, the scope of the coverage or protection afforded thereby is uncertain. Failure to secure such meaningful patent protection could have a material adverse effect on the Company's business, financial condition and results of operations. Several groups are attempting to identify and patent gene fragments and full-length genes, the functions of which have not been characterized, as well as fully characterized genes. There is substantial uncertainty regarding the possible patent protection for gene fragments or genes without known function or correlation with specific diseases. To the extent any patents issue to other parties on such partial or full-length genes, the risk increases that the potential products and processes of the Company or its strategic partners may give rise to claims of patent infringement. The public availability of partial or full sequence information or the existence of patent applications related thereto, even if not accompanied by relevant function or disease association, prior to the time the Company applies for patent protection on a corresponding gene could adversely affect the Company's ability to obtain patent protection with respect to such gene or to the related expression patterns. Furthermore, others may have filed, and in the future are likely to file, patent applications covering genes or gene products that are similar, or identical to, any for which the Company may seek patent protection. No assurance can be given that any such patent application will not have priority over patent applications filed by the Company. Any legal action against the Company or its strategic partners claiming damages and seeking to enjoin commercial activities relating to the affected products and processes could, in addition to subjecting the Company to potential liability for damages, require the Company or its strategic partners to obtain a license in order to continue to manufacture or market the affected products and processes. There can be no assurance that the Company or its strategic partners would prevail in any such action or that any license required under any such patent would be made available on commercially acceptable terms, if at all. The Company believes that there is likely to be significant litigation in the industry regarding patent and other intellectual property rights. If the Company becomes involved in such litigation, it could consume a substantial portion of the Company's managerial and financial resources and have a material adverse effect on the Company's business, financial condition and results of operations. Enactment of legislation implementing the General Agreement on Tariffs and Trade has resulted in certain changes to United States patent laws that became effective on June 8, 1995. Most notably, the term of patent protection for patent applications filed on or after June 8, 1995 is no longer a period of 17 years from the date of grant. The new term of United States patents will commence on the date of issuance and terminate 20 years from the earliest effective filing date of the application. Because the time from filing to issuance of biotechnology patent applications is often more than three years, a 20-year term from the effective date of filing may result in a substantially shortened period of patent protection which may adversely affect the Company's patent position. If this change results in a shorter period of patent coverage, the Company's business could be adversely affected to the extent that the duration and level of the royalties it is entitled to receive from its strategic partners are based on the existence of a valid patent covering the product subject to the royalty obligation. With respect to proprietary know-how that is not patentable and for processes for which patents are difficult to enforce, the Company has chosen to rely on trade secret protection and confidentiality agreements to protect its interests. The Company believes that several elements of its ACCELERATED DRUG DISCOVERY system involve proprietary know-how, technology or data which are not covered by patents or patent applications. In addition, the Company has developed a proprietary index of gene and gene fragment sequences which it updates on an ongoing basis. Some of these data will be the subject of patent applications whereas other data will be maintained as proprietary trade secret information. The Company 43

has taken security measures to protect its proprietary know-how and technologies and confidential data and continues to explore further methods of protection. While Gene Logic requires all employees, consultants and collaborators to enter into confidentiality agreements, there can be no assurance that proprietary information will not be disclosed, that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the Company's trade secrets, or that the Company can meaningfully protect its trade secrets. In the case of a strategic partnership or other collaborative arrangement which requires the sharing of data, the Company's policy is to make available to its partner only such data as are relevant to the partnership or arrangement, under controlled circumstances, and only during the contractual term of the strategic partnership or collaborative arrangement, and subject to a duty of confidentiality on the part of its partner or collaborator. There can be no assurance, however, that such measures will adequately protect the Company's data. Any material leak of confidential data into the public domain or to third parties may have a material adverse effect on the Company's business, financial condition and results of operations. The Company is a party to various license agreements which give it rights to use certain technologies and biological materials in its research and development processes. There can be no assurance that the Company will be able to maintain such rights on commercially reasonable terms, if at all. Failure by the Company to maintain such rights could have a material adverse effect on the Company's business, financial condition and results of operations. COMPETITION Competition among entities attempting to identify the genes associated with specific diseases and to develop products based on such discoveries is intense. Gene Logic faces, and will continue to face, competition from pharmaceutical, biotechnology and diagnostic companies, academic and research institutions and government agencies, both in the United States and abroad. Several entities are attempting to identify and patent randomly sequenced genes and gene fragments, while others are pursuing a gene identification, characterization and product development strategy based on positional cloning. The Company is aware that certain entities are utilizing a variety of different gene expression analysis methodologies, including the use of chip-based systems, to attempt to identify disease-related genes. In addition, numerous pharmaceutical companies are developing genomic research programs, either alone or in partnership with the Company's competitors. Competition among such entities is intense and is expected to increase. In order to compete against existing and future technologies, the Company will need to demonstrate to potential customers that its technologies and capabilities are superior to competing technologies. Many of the Company's competitors have substantially greater capital resources, research and development staffs, facilities, manufacturing and marketing experience, distribution channels and human resources than the Company. These competitors may discover, characterize or develop important genes, drug targets or drug leads, drug discovery technologies or drugs in advance of Gene Logic or which are more effective than those developed by Gene Logic or its strategic partners, or may obtain regulatory approvals of their drugs more rapidly than the Company and its strategic partners, any of which could have a material adverse affect on any similar Gene Logic program. Moreover, there can be no assurance that the Company's competitors will not obtain patent protection or other intellectual property rights that would limit the Company's or its strategic partners' ability to use the Company's drug discovery technologies or commercialize therapeutic or diagnostic products, which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company also faces competition from these and other entities in gaining access to cells, tissues and nucleic acid samples used in its discovery programs. The Company will rely on its strategic partners for support of certain of its discovery programs and intends to rely on its strategic partners for preclinical and clinical development of related potential products and the manufacturing and marketing of such products. Each of the Company's strategic partners 44

is conducting multiple product development efforts within each disease area which is the subject of its strategic alliance with Gene Logic. Generally, the Company's strategic alliance agreements do not preclude the strategic partner from pursuing development efforts utilizing approaches distinct from that which is the subject of the alliance. Any product candidate of the Company, therefore, may be subject to competition with a potential product under development by a strategic partner. Future competition will come from existing competitors as well as other companies seeking to develop new technologies for drug discovery based on gene sequencing, target gene identification, bioinformatics and related technologies. In addition, certain pharmaceutical and biotechnology companies have significant needs for genomic information and may choose to develop or acquire competing technologies to meet such needs. Genomic technologies have undergone and are expected to continue to undergo rapid and significant change. The Company's future success will depend in large part on its maintaining a competitive position in the genomics field. Rapid technological development by the Company or others may result in products or technologies becoming obsolete before the Company recovers the expenses it incurs in connection with their development. Products offered by the Company could be made obsolete by less expensive or more effective drug target and drug lead technologies, including technologies which may be unrelated to genomics. There can be no assurance that the Company will be able to make the enhancements to its technology necessary to compete successfully with newly emerging technologies. GOVERNMENT REGULATION The Company does not plan to conduct clinical trials in humans or commercialize therapeutic products discovered as a result of its genes, drug target and drug lead discovery programs but intends to rely on its strategic partners to conduct such activities. Prior to marketing, any new drug developed by the Company's strategic partners must undergo an extensive regulatory approval process in the United States and other countries. This regulatory process, which includes preclinical studies and clinical trials, and may include post-marketing surveillance of each compound to establish its safety and efficacy, can take many years and require the expenditure of substantial resources. Data obtained from preclinical studies and clinical trials are subject to varying interpretations that could delay, limit or prevent regulatory approval. Delays or rejections may also be encountered based upon changes in FDA policies for drug approval during the period of product development and FDA regulatory review of each submitted NDA in the case of new pharmaceutical agents, or PLA or BLA in the case of biological therapeutics. Similar delays may also be encountered in the regulatory approval of any diagnostic product, where such approval is required, and in obtaining regulatory approval in foreign countries. Delays in obtaining regulatory approvals could adversely affect the marketing of any drugs developed by the Company or its strategic partners, impose costly procedures upon the Company's and its partners' activities, diminish any competitive advantages that the Company or its partners may attain and adversely affect the Company's receipt of royalties. There can be no assurance that regulatory approval will be obtained for any drugs or diagnostic products developed by the Company or its strategic partners. Furthermore, regulatory approval may entail limitations on the indicated uses of a drug. Because certain of the products likely to result from the Company's disease research programs involve the application of new technologies and may be based upon a new therapeutic approach, such products may be subject to substantial additional review by various government regulatory authorities and, as a result, regulatory approvals may be obtained more slowly than for products based upon more conventional technologies. Even if regulatory approval is obtained, a marketed product and its manufacturer are subject to continuing review. Discovery of previously unknown problems with a product may result in withdrawal of the product from the market, and could have adverse effects on the Company's business, financial conditions and results of operations. Violations of regulatory requirements at any stage during the regulatory process, including preclinical studies and clinical trials, the approval process, post-approval or in good manufacturing practices manufacturing requirements, may result in various adverse consequences to the Company, including the FDA's delay in approval or refusal to approve a product, withdrawal of an 45

approved product from the market or the imposition of criminal penalties against the manufacturer and NDA, PLA or BLA holder. No IND has been submitted for any product candidate resulting from the Company's discovery programs, and no product candidate has been approved for commercialization in the United States or elsewhere. The Company intends to rely on its strategic partners to file INDs and generally direct the regulatory approval process. There can be no assurance that the Company's strategic partners will be able to conduct clinical testing or obtain necessary approvals from the FDA or other regulatory authorities for any products. Failure to obtain required governmental approvals will delay or preclude the Company's strategic partners from marketing drugs or diagnostic products developed through the Company's research or limit the commercial use of such products and could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's research and development activities involve the controlled use of certain biological and other hazardous materials, chemicals and various radioactive materials. The Company is subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of such materials and certain waste products. Although the Company believes that its safety procedures for handling and disposing of such materials comply with the standards prescribed by federal, state and local laws and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. In the event of such an accident, the Company could be held liable for any damages that result, and any liability could exceed the resources of the Company. Other than such laws and regulations governing the generation, use and disposal of hazardous materials and wastes, and limiting workplace exposures to such materials, the Company does not believe its current and proposed activities are subject to any specific government regulation other than regulations affecting the operations of companies generally. SCIENTIFIC ADVISERS The Company has established a select group of scientists and physicians to advise it on scientific and technical matters in areas of the Company's business. The scientific advisers are compensated by retainer and on a time and expenses basis, and certain of them have received shares of Common Stock of the Company. The Company has entered into consulting agreements with a number of the scientific advisers. None of the scientific advisers is employed by the Company, and they may have other commitments to or consulting or advisory contracts with their employers or other entities that may conflict or compete with their obligations to the Company. Accordingly, such persons are expected to devote only a limited portion of their time to the Company. The Company's scientific advisers include: KENNETH L. BEATTIE, PH.D., Senior Research Staff Member, Oak Ridge National Laboratory. Dr. Beattie, the inventor of the Flow-thru Chip, is an exclusive consultant to the Company in its program for the development of analytical microsystems for gene expression profiling. He is an inventor of several key patents in the area of DNA probe and sequencing technologies and genome mapping. Dr. Beattie holds a Ph.D. from the University of Tennessee. G. STEVEN BORA, M.D., Assistant Professor of Pathology, Urology and Oncology, Johns Hopkins University School of Medicine. Dr. Bora consults with the Company in the field of prostate cancer. Dr. Bora directs the PELICAN (Project to Eliminate Lethal Prostate Cancer) laboratory in the Johns Hopkins Department of Pathology. Dr. Bora holds a M.D. from Cornell University Medical College. RONALD FALK, M.D., Professor of Medicine and Chief, Division of Nephrology, University of North Carolina. Dr. Falk consults with the Company in the field of kidney disease. He is co-director of the Glomerular Disease Collaboration Network. Dr. Falk holds a M.D. from the University of North Carolina. J. CHARLES JENNETTE, M.D., Professor of Medicine, Pathology and Laboratory Medicine, University of North Carolina. Dr. Jennette consults with the Company in the field of kidney disease. He is Director of 46

the Nephropathology Laboratory at the University of North Carolina, Jennette holds a M.D. from the University of North Carolina. AARON KLUG, PH.D., Director, MRC Laboratory of Molecular Biology, University of Cambridge, England and Fellow of Peterhouse College. Professor Klug, a scientific founder of the Company, has been widely recognized for his contributions to modern molecular biology. He was elected a fellow of the Royal Society in 1969, received the Nobel Prize for Chemistry in 1982 and the Copley Medal of the Royal Society in 1985 and was knighted in 1988. RONALD A. MORTON, JR., M.D., Assistant Professor in Urology, Baylor College of Medicine. Dr. Morton is Director of Laboratories at the Baylor Prostate Center, one of three National Cancer Institute prostate cancer SPORE (Specialized Programs of Research Excellence) centers, and is responsible for developing and expanding its extensive library of normal and malignant human prostate tissues. He is an exclusive consultant to Gene Logic in the field of gene discovery in prostate cancer. Dr. Morton holds a M.D. from Johns Hopkins University School of Medicine. He is an American Foundation for Urologic Disease Research Scholar. JAY R. SHAPIRO, M.D., Professor, Division of Geriatric Medicine, Johns Hopkins University School of Medicine. Dr. Shapiro is an expert in human bone diseases and an exclusive consultant to the Company in the field of osteoporosis. He holds a M.D. from Boston University School of Medicine. SHERMAN M. WEISSMAN, M.D., Sterling Professor of Genetics and Medicine, Yale University School of Medicine. Dr. Weissman, the inventor of the READS and MuST technologies, is a scientific founder of and a key adviser to the Company. Dr. Weissman graduated with advanced degrees in mathematics from the University of Chicago and a M.D. from Harvard Medical School. He is a member of the National Academy of Sciences, a fellow of the American Association for the Advancement of Science and sits on the editorial board of the PROCEEDINGS OF THE NATIONAL ACADEMY OF SCIENCES and other eminent journals. ROBERT H. YOLKEN, M.D., Professor of Pediatrics and Director, The Stanley Laboratory for the Study of Schizophrenia and Bipolar Disorder, Johns Hopkins University School of Medicine. Dr. Yolken consults with the Company in the fields of gene target discovery in schizophrenia and affective disorders. Dr. Yolken holds a M.D. from Harvard University. EMPLOYEES As of September 30, 1997, the Company had a total of 57 employees, 18 of whom hold M.D., Ph.D or D.Sc. degrees and ten of whom hold other advanced degrees, and one part-time employee. Of these, 46 were engaged in research and development and 11 were engaged in business development, finance and general administration. The Company's future success depends in significant part upon the continued service of its key scientific, technical and senior management personnel and its continuing ability to attract and retain highly qualified technical and managerial personnel. None of the Company's employees is represented by a labor union or covered by a collective bargaining agreement. The Company has not experienced any work stoppages and considers its relations with its employees to be good. FACILITIES The Company's facilities are located in Columbia, Maryland. The Company leases approximately 21,000 square feet of laboratory and office space. These facilities are leased through February 28, 1998. The Company recently entered into a ten-year lease for approximately 50,000 square feet of laboratory and office space in Gaithersburg, Maryland and plans to relocate its operations to such facility in January 1998. The Company believes that, upon such relocation, the Company's facilities will be adequate for its current and projected needs and that additional space will be available as needed. The Company has leased approximately 5,000 square feet of office space in Berkeley, California. LEGAL PROCEEDINGS Gene Logic is not a party to any material legal proceedings. 47

MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES The following table sets forth certain information regarding the Company's directors, executive officers and key employees as of September 30, 1997:
NAME ----------------------------------------------------Alan G. Walton, Ph.D., D.Sc.(1)...................... Michael J. Brennan, M.D., Ph.D. ..................... Keith O. Elliston, Ph.D. ............................ Mark D. Gessler...................................... Eric M. Eastman, Ph.D. .............................. Gregory G. Lennon, Ph.D. ............................ Victor M. Markowitz, D.Sc. .......................... Daniel R. Passeri, J.D. ............................. Jules Blake, Ph.D. (1)(2)............................ Charles L. Dimmler III (1)(2)........................ G. Anthony Gorry, Ph.D. ............................. Jeffrey D. Sollender................................. AGE --61 40 36 36 45 40 44 36 73 55 56 37 POSITION ----------------------------------------------------Chairman of the Board of Directors President, Chief Executive Officer and Director Senior Vice President and Chief Scientific Officer Senior Vice President, Corporate Development and Chief Financial Officer Vice President, Technology Management Vice President, Genomics Research Vice President, Bioinformatics Systems Vice President, Business Development and Intellectual Property Director Director Director Director

(1) Member of the Compensation Committee (2) Member of the Audit Committee ALAN G. WALTON, PH.D., D.SC. has served as Chairman of the Board of Directors of the Company since its inception in September 1994. He has been a General Partner of Oxford Bioscience Partners, a private equity investment firm, since 1991 and a member of the Board of Directors of Collaborative Clinical Research since 1994. In 1981, Dr. Walton co-founded University Genetics Co., a public corporation specializing in technology transfer from academic institutions to industry and in the seed financing of high-technology start-ups, and served as President and Chief Executive Officer until 1987. He has lectured extensively at various universities, including Harvard Medical School, Indiana University and Case Western Reserve University where he was Professor of Macromolecular Science and Director of the Laboratory for Biological Macromolecules. Dr. Walton received a Ph.D. in chemistry and a D.Sc. in biological chemistry from Nottingham University, England. MICHAEL J. BRENNAN, M.D., PH.D. has served as President, Chief Executive Officer and a director of the Company since December 1995. From October 1993 to November 1995, he was Vice President, Business Development for Corange International Limited's worldwide therapeutics business, Boehringer Mannheim Therapeutics. From June 1990 to October 1993, Dr. Brennan was a director and the general manager of Boehringer Mannheim South Africa. Dr. Brennan received a Ph.D. in neurobiology and a M.D. from the University of the Witwatersrand, Johannesburg, South Africa. In 1985, he completed his residency in neurology at Boston City Hospital. KEITH O. ELLISTON, PH.D. has served as Senior Vice President and Chief Scientific Officer of the Company since February 1997. From July 1996 to February 1997, Dr. Elliston was Head of Genome Sciences at Bayer Corporation, a pharmaceutical company, and also responsible for establishing and directing its bioinformatics effort worldwide. From 1986 to July 1996, Dr. Elliston was involved in a wide range of genomics and drug discovery programs at Merck & Co., Inc. ("Merck"), a pharmaceutical 48

company. In 1993, he founded the Department of Bioinformatics at Merck. He also co-founded and was the scientific director of the Merck Gene Index project, involving the coordinated efforts of Merck, Washington University, Lawrence Livermore National Laboratory, the University of Pennsylvania and the National Center for Biotechnology Information. Dr. Elliston received his M.S. degree in genetics from the University of Minnesota and a Ph.D. in molecular genetics from Rutgers University. He is an advisory board member of the National Center for Biotechnology Information, National Institutes of Health, and the National Center for Genome Resources, and an Adjunct Professor at Rutgers University. MARK D. GESSLER has served as Senior Vice President, Corporate Development and Chief Financial Officer of the Company since June 1996. From February 1993 to June 1996, Mr. Gessler was with GeneMedicine, Inc., a gene therapy company, most recently as Vice President, Corporate Development. From 1988 until January 1993, he was Director of Business Development at BCM Technologies, Inc., the venture and technology subsidiary of Baylor College of Medicine. While in that position, Mr. Gessler co-founded three biotechnology companies and a software company. Mr. Gessler holds a MBA from the University of Tennessee and has been an Adjunct Professor of Business Administration at Rice University since 1991. ERIC M. EASTMAN, PH.D. has served as Vice President, Technology Management of the Company since August 1997. He served as Vice President, Scientific Operations of the Company from September 1996 to August 1997. From June 1993 to September 1996, Dr. Eastman was Director of Gene Expression and Process Research & Development at GeneMedicine, Inc. He was a founder and served as Vice President and Chief Scientific Officer of Lark Sequencing Technologies, Inc., a molecular biology services company, from 1989 to June 1993. Dr. Eastman holds a M.S. from the University of Connecticut and received a M.Phil. degree and a Ph.D. in human genetics and development from Columbia University College of Physicians and Surgeons. GREGORY G. LENNON, PH.D. has served as Vice President, Genomics Research since September 1997. Prior to joining Gene Logic, Dr. Lennon was a senior scientist of the Human Genome Center at Lawrence Livermore National Laboratory and manager of the functional genomics research portfolio for the Department of Energy's Joint Genome Institute from October 1991 to August 1997. Dr. Lennon is a founder and the director of the I.M.A.G.E. (Integrated Molecular Analysis of Gene Expression) Consortium funded by the Department of Energy. He was a participant in both the Merck Gene Index project and the National Cancer Institute's Cancer Genome Anatomy Project. Dr. Lennon holds a Ph.D. in genetics from the University of Pennsylvania. He is an adviser to the National Cancer Institute of the National Institutes of Health. VICTOR M. MARKOWITZ, D.SC. has served as Vice President, Bioinformatics Systems since September 1997. Prior to joining Gene Logic, Dr. Markowitz was a staff scientist at Lawrence Berkeley National Laboratory from 1987 to August 1997, serving most recently as project leader of the Data Management Research and Development Group. He is the principal architect of the Object Protocol Model (OPM) software. Dr. Markowitz received his M.Sc. and D.Sc. in computer science from the Israel Institute of Technology. DANIEL R. PASSERI, J.D. has served as Vice President, Business Development and Intellectual Property of the Company since March 1997. From March 1995 to March 1997, he was Director of Technology Management for the Boehringer Mannheim Group, responsible for the assessment and acquisition or licensing of new biomedical technologies. From January 1992 to February 1995 he was Acting Chief, Cellular Growth and Regulation Branch of the Office of Technology Transfer of the National Institutes of Health and its Senior Licensing Specialist. He served as a Patent Examiner in the biotechnology section of the USPTO. Mr. Passeri holds a M.Sc. in biotechnology from the Imperial College of Science, Technology and Medicine, University of London. He holds a J.D. from George Washington University. He is registered to practice before the USPTO and in the State of Maryland and has been an adjunct professor at George Washington University since 1995. 49

JULES BLAKE, PH.D. has served as a director of the Company since its inception. From 1973 until his retirement in 1989, Dr. Blake served as Vice President of Research and Development and Vice President, Corporate Scientific Affairs, for Colgate-Palmolive, Inc., a consumer products company. Dr. Blake was appointed as an Industrial Research Institute Fellow at the United States Office of Science and Technology Policy, Executive Office of the President, where he served until 1991. Dr. Blake serves on the boards of directors of the public companies Martek Biosciences Corporation and ProCyte Corporation. Dr. Blake holds a Ph.D in organic chemistry from the University of Pennsylvania. CHARLES L. DIMMLER III has served as a director of the Company since May 1996. Since 1988, Mr. Dimmler has been a General Partner of Hambro International Equity Partners, an equity investment firm, and is currently also the principal investment officer of Cross Atlantic Partners Funds, an equity investment firm, and an operating officer of Hambro Health International, Inc., an affiliate of Hambros Bank Limited, a global merchant bank based in London. Mr. Dimmler serves as a director of SunPharm, Inc., a public company, and various private companies. He holds an honors degree from the University of California at Davis. G. ANTHONY GORRY, PH.D. has served as a director of the Company since January 1997. Since April 1992, Dr. Gorry has been Vice President for Information Technology and Professor of Computer Science at Rice University. He is the Chairman and a founder of The Forefront Group, Inc., a public information technology company. From 1975 to April 1992, he served as Vice President for Information Technology and Professor of Medical Informatics and Neuroscience at Baylor College of Medicine, as well as Director of the W. M. Keck Center for Computational Biology and Adjunct Professor of Computer Science at Rice University. Dr. Gorry holds a M.S. in chemical engineering from the University of California at Berkeley and a Ph.D. in computer science from Massachusetts Institute of Technology. He is a fellow of the American College of Medical Informatics and a member of the Institute of Medicine and of the National Academy of Sciences. JEFFREY D. SOLLENDER has served as a director of the Company since July 1997. Mr. Sollender is a founder of and adviser to Biotechvest L.P., a venture capital investment firm formed in 1993. From 1994 through December 1995, Mr. Sollender served as an adviser to Forward Ventures, a venture capital investment firm. Mr. Sollender became a venture partner of Forward Ventures in 1996 and a general partner in September 1997. Mr. Sollender co-founded Triangle Pharmaceuticals, Inc., a biopharmaceutical company, in 1994, CombiChem Inc., a combinatorial chemistry company, in 1994 and GenQuest, Inc., a functional genomics company, in 1996. He served as Vice President of Operations and Business Development for CombiChem Inc. and GenQuest, Inc. until January 1996 and June 1996, respectively. Mr. Sollender co-founded AriZeke Pharmaceuticals, an oral drug delivery company, in 1997 and continues to serve as Chairman and Chief Executive Officer of the company. Mr. Sollender received his MBA from the University of Chicago Graduate School of Business. COMMITTEES OF THE BOARD OF DIRECTORS The Compensation Committee consists of Dr. Walton, Dr. Blake and Mr. Dimmler. The Compensation Committee makes recommendations regarding the Company's 1997 Equity Incentive Plan, Non-Employee Directors' Stock Option Plan and Employee Stock Purchase Plan and determines salaries for the executive officers and incentive compensation for employees and consultants of the Company. The Audit Committee consists of Dr. Blake and Mr. Dimmler. The Audit Committee makes recommendations to the Board of Directors regarding the selection of independent auditors, reviews the results and scope of the audit and other services provided by the Company's independent auditors and reviews and evaluates the Company's audit and control functions. DIRECTOR COMPENSATION The Company's non-employee directors who are not affiliated with stockholders of the Company currently receive $6,000 per year for their attendance at Board meetings and all directors are reimbursed 50

for certain expenses in connection with attendance at Board and committee meetings. Non-employee directors receive automatic grants of options under the Company's Non-employee Directors' Stock Option Plan as described below. See "--Equity Incentive Plans." COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No executive officer of the Company serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company's Board of Directors or Compensation Committee. See "Certain Transactions" for a description of transactions between the Company and entities affiliated with members of the Compensation Committee. EXECUTIVE COMPENSATION The following table sets forth summary information concerning compensation paid by, or accrued for services rendered to, the Company during the fiscal year ended December 31, 1996 to the Company's Chief Executive Officer and the two other most highly compensated executive officers who earned in excess of $100,000 in salary and bonus during the fiscal year ended December 31, 1996 (the "Named Executive Officers"). SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION -----------------------------------------------SECURITIES SALARY UNDERLYING YEAR ($)(1) BONUS ($) OPTIONS(#) --------- ------------ ----------- ------------1996 $ 200,000 $ 30,000(2) 245,000 1996 95,363 40,000 25,000

NAME AND PRINCIPAL POSITION -------------------------------------------------Michael J. Brennan, M.D. Ph.D. ................... President, Chief Executive Officer and Director Mark D. Gessler................................... Senior Vice President, Corporate Development and Chief Financial Officer Richard E. Kouri, Ph.D. (3)....................... Senior Vice President and Chief Technical Officer

ALL OTHER COMPENSATION ($) ---------------

1996

106,875

30,000

--

90,000(4)

(1) In accordance with the rules of the Securities and Exchange Commission (the "Commission"), the compensation described in this table does not include medical, group life insurance or other benefits received by the Named Executive Officers which are available generally to all salaried employees of the Company, and certain perquisites and other personal benefits received by the Named Executive Officers which do not exceed the lesser of $50,000 or 10% of any such officer's salary and bonus disclosed in this table. (2) Includes an amount that was assigned to a corporation of which Dr. Brennan is the sole stockholder. (3) Dr. Kouri resigned from the Company effective on October 15, 1996. (4) Represents a $90,000 severance payment to Dr. Kouri in connection with his resignation from the Company. 51

STOCK OPTION GRANTS OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth, for the fiscal year ended December 31, 1996, certain information regarding options granted to each of the Named Executive Officers:
INDIVIDUAL GRANTS ---------------------------------------------------------PERCENTAGE NUMBER OF OF TOTAL SECURITIES OPTIONS UNDERLYING GRANTED TO OPTIONS EMPLOYEES IN EXERCISE PRICE GRANTED FISCAL PER SHARE EXPIRATION (#) YEAR (1) ($)(2) DATE ----------- --------------- --------------- ----------100,000 20.5% $ 0.01 2/28/06 145,000 29.8% 0.15 12/19/06 25,000 5.1% 0.15 12/19/06 ----POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM (3)($) ---------------------5% 10% ---------- ---------1,790,784 2,852,117 2,576,337 4,115,269 444,196 709,529 ---

NAME ------------------------------------Michael J. Brennan, M.D., Ph.D....... Mark D. Gessler...................... Richard E. Kouri, Ph.D...............

(1) Based on options to purchase 487,000 shares granted to employees in fiscal 1996, including the Named Executive Officers. The options were granted under the Company's 1997 Equity Incentive Plan. Options granted under such plan generally vest monthly over four years. The foregoing options accelerate upon achievement of certain performance-based goals, including vesting of 80% of such options upon completion of this offering and the remaining 20% 180 days thereafter. (2) Represents the fair market value of the underlying Common Stock as determined by the Board of Directors on the date of grant. (3) The potential realizable value is calculated based on the term of the option at its time of grant (10 years) and the assumed initial public offering price of $11.00. It is calculated assuming that the stock price on the date of grant appreciates at the indicated annual rate, compounded annually for the entire term of the option and that the option is exercised and sold on the last day of its term for the appreciated stock price. These amounts represent certain assumed rates of appreciation only, in accordance with the rules of the Commission, and do not reflect the Company's estimate or projection of future stock price performance. Actual gains, if any, are dependent on the actual future performance of the Company's Common Stock. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES The following table sets forth, with respect to each of the Named Executive Officers, information regarding the number and value of securities underlying unexercised options held by the Named Executive Officers as of December 31, 1996.
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR-END (#) ---------------------------EXERCISABLE UNEXERCISABLE ------------- ------------3,021 141,979 521 24,479 --VALUE OF UNEXERCISED INTHE MONEY OPTIONS AT FISCAL YEAR-END ($)(1) -------------------------EXERCISABLE UNEXERCISABLE ----------- ------------32,778 1,540,472 5,653 265,597 ---

NAME ------------------------------------Michael J. Brennan, M.D., Ph.D....... Mark D. Gessler...................... Richard E. Kouri, Ph.D...............

SHARES ACQUIRED ON EXERCISE(#) --------------100,000 ---

VALUE REALIZED($) ----------14,000 ---

(1) Based on the assumed initial public offering price of $11.00 per share, less the exercise price. EMPLOYMENT AGREEMENTS On December 1, 1995, Michael J. Brennan, the President, Chief Executive Officer and a director and stockholder of the Company, entered into an employment agreement with the Company. Dr. Brennan will be paid $200,000 in salary for 1997 under such agreement. The employment agreement has a five-year term and provides, among other things, for the payment to Dr. Brennan of annual bonuses and the acceleration of certain unvested options upon achievement of certain performance-based goals, including vesting of 80% of such options upon completion of this offering and the remaining 20% 180 days thereafter. Of Dr. Brennan's total outstanding options to purchase 538,962 shares, options to purchase 52

131,000 shares will be exercisable upon completion of this offering. The employment agreement also provides that Dr. Brennan will be offered the opportunity to participate in any future equity financings on a pro rata basis, provided that such right terminates upon the closing of this offering. Dr. Brennan and the Company have also entered into an Equity Adjustment Agreement whereby the Company agreed to pay Dr. Brennan a cash bonus upon the occurrence of a change in control of the Company. The Equity Adjustment Agreement terminates upon the closing of this offering. On May 16, 1996, Mark D. Gessler, the Senior Vice President, Corporate Development and Chief Financial Officer of the Company and a stockholder of the Company, entered into an employment agreement with the Company. The employment agreement has a four-year term and provides, among other things, for the payment to Mr. Gessler of annual bonuses and the acceleration of certain unvested options upon achievement of certain performance-based goals, including vesting of 80% of such options upon completion of this offering and the remaining 20% 180 days thereafter. Of Mr. Gessler's total outstanding options to purchase 346,981 shares, options to purchase 140,000 shares will be exercisable upon completion of this offering. Mr. Gessler will be paid $185,000 in salary for 1997 under such agreement. EQUITY INCENTIVE PLANS 1997 EQUITY INCENTIVE PLAN The Company adopted its 1996 Stock Plan in January 1996 and amended and restated the 1996 Stock Plan in September 1997 as the 1997 Equity Incentive Plan (the "Stock Plan"). An aggregate of 6,100,000 shares of the Company's Common Stock have been reserved for issuance pursuant to the exercise of stock awards granted to employees, directors and consultants under the Stock Plan. The Stock Plan will terminate in September 2007, unless sooner terminated by the Board. The Stock Plan permits the granting of options intended to qualify as incentive stock options ("Incentive Stock Options") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to employees (including officers and employee directors), and options that do not so qualify ("Nonstatutory Stock Options," and, together with Incentive Stock Options, the "Options") to employees (including officers and employee directors) and consultants (including non- employee directors). In addition, the Stock Plan permits the granting of stock appreciation rights (SARs) appurtenant to or independently of Options, as well as stock bonuses and rights to purchase restricted stock (Options, SARs, stock bonuses and rights to purchase restricted stock are hereinafter referred to as "Stock Awards"). No person is eligible to be granted Options and SARs covering more than 700,000 shares of the Company's Common Stock in any 12-month period. The Stock Plan is administered by the Board or a committee appointed by the Board. Subject to the limitations set forth in the Stock Plan, the Board has the authority to select the persons to whom grants are to be made, to designate the number of shares to be covered by each Stock Award, to determine whether an Option is to be an Incentive Stock Option or a Nonstatutory Stock Option, to establish vesting schedules, to specify the Option exercise price and the type of consideration to be paid to the Company upon exercise and, subject to certain restrictions, to specify other terms of Stock Awards. The maximum term of Options granted under the Stock Plan is ten years. The aggregate fair market value, determined at the time of grant, of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an optionee during any calendar year (under all such plans of the Company and its affiliates) may not exceed $100,000. Options granted under the Stock Plan generally are non-transferable and expire three months after the termination of an optionee's service to the Company. In general, if an optionee is permanently disabled or dies during his or her service to the Company, such person's Option may be exercised up to 12 months following such disability and up to 18 months following such death. The exercise price of Options granted under the Stock Plan is determined by the Board of Directors in accordance with the guidelines set forth in the Stock Plan. The exercise price of an Incentive Stock Option cannot be less than 100% of the fair market value of the Common Stock on the date of the grant. The exercise price of a Nonstatutory Stock Option cannot be less than 85% of the fair market value of the Common Stock on the date of grant. Options granted under the Stock Plan vest at the rate specified in the option agreement. The exercise price of Incentive Stock Options granted to any person who at the time of grant owns stock representing more than 10% of the total combined voting power of all classes of the 53

Company's capital stock must be at least 110% of the fair market value of such stock on the date of grant and the term of such Incentive Stock Options cannot exceed five years. Any stock bonuses or restricted stock purchase awards granted under the Stock Plan will be in such form and will contain terms and conditions as the Board deems appropriate. The purchase price under any restricted stock purchase agreement will not be less than 85% of the fair market value of the Company's Common Stock on the date of grant. Stock bonuses and restricted stock purchase agreements awarded under the Stock Plan are generally non-transferable. Pursuant to the Stock Plan, shares subject to Stock Awards that have expired or otherwise terminated without having been exercised in full again become available for the grant, but shares subject to exercised stock appreciation rights will not again become available for the grant. The Board of Directors has the authority to reprice outstanding Options and SARs and to offer optionees and holders of SARs the opportunity to replace outstanding options and SARs with new options or SARs for the same or a different number of shares. Upon certain changes in control of the Company, all outstanding Stock Awards under the Stock Plan must either be assumed or substituted by the surviving entity. In the event the surviving entity determines not to assume or substitute such Stock Awards, with respect to persons then performing services as employees, directors or consultants, the time during which such Stock Awards may be exercised will be accelerated and such Stock Awards terminated if not exercised prior to such change in control. In the event that any person who was providing services as an employee, director or consultant immediately prior to the consummation of a change of control is terminated other than for cause within 12 months following such change of control, any stock awards held by such persons shall immediately become vested and exercisable or free from repurchase rights. As of September 30, 1997, the Company had issued 100,000 shares of Common Stock pursuant to the exercise of purchase rights granted under the Stock Plan, and had granted Incentive and Nonstatutory Stock Options to purchase an aggregate of 2,716,881 shares of Common Stock. As of September 30, 1997, 3,334,887 shares of Common Stock remained available for future grants under the Stock Plan. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN In September 1997, the Company adopted a Non-employee Directors' Stock Option Plan (the "Directors' Plan") to provide for the automatic grant of options to purchase shares of Common Stock to non-employee directors of the Company. The Directors' Plan is administered by the Board, unless the Board delegates administration to a committee of disinterested directors. The maximum number of shares of Common Stock that may be issued pursuant to options granted under the Directors' Plan is 125,000. Pursuant to the terms of the Directors' Plan: (i) each person who after the effective date of this offering for the first time becomes a Non-employee Director automatically will be granted, upon the date of his or her initial appointment or election to be a Non-employee Director, a one-time option to purchase 30,000 shares of Common Stock (the "Initial Options"); and (ii) on the date of each annual meeting of the stockholders of the Company after the effective date of this offering (other than any such annual meeting held in 1997), each person who is a Non-employee Director following such annual meeting (other than a person who receives a grant in accordance with (i) above on or during the three-month period preceding such date) automatically will be granted an option to purchase 7,500 shares of Common Stock (the "Annual Options"). No options granted under the Directors' Plan may be exercised after the expiration of ten years from the date it was granted. The Initial Options granted under the Directors' Plan vest on an annual basis over four years. The Annual Options vest on the anniversary of the date of grant. The exercise price of options under the Directors' Plan will equal 100% of the fair market value of the Common Stock on the date of grant. Options granted under the Directors' Plan are generally non-transferable. Unless otherwise terminated by the Board of Directors, the Directors' Plan automatically terminates in September 2007. As of September 30, 1997, no options to purchase shares of Common Stock had been granted under the Directors' Plan. EMPLOYEE STOCK PURCHASE PLAN In September 1997, the Company adopted an Employee Stock Purchase Plan (the "Purchase Plan") covering an aggregate of 250,000 shares of Common Stock. The Purchase Plan is intended to qualify as an 54

employee stock purchase plan within the meaning of Section 423 of the Code. Under the Purchase Plan, the Board may authorize participation by eligible employees, including officers, in periodic offerings following the commencement of the Purchase Plan. The initial offering under the Purchase Plan will commence on the date of this Prospectus and terminate on January 31, 2000. Unless otherwise determined by the Board, employees are eligible to participate in the Purchase Plan only if they are employed by the Company or a subsidiary of the Company designated by the Board for at least 20 hours per week and are customarily employed by the Company or a subsidiary of the Company designated by the Board for at least five months per calendar year. Employees who participate in an offering may have up to 15% of their earnings withheld pursuant to the Purchase Plan. The amount withheld is then used to purchase shares of the Common Stock on specified dates determined by the Board. The price of Common Stock purchased under the Purchase Plan will be equal to 85% of the lower of the fair market value of the Common Stock at the commencement date of each offering period or the relevant purchase date. Employees may end their participation in this offering at any time during this offering period, and participation ends automatically on termination of employment with the Company. In the event of a merger, reorganization, consolidation or liquidation involving the Company, the Board has discretion to provide that each right to purchase Common Stock will be assumed or an equivalent right substituted by the successor corporation, or the Board may shorten this offering period and provide for all sums collected by payroll deductions to be applied to purchase stock immediately prior to such merger or other transaction. The Board has the authority to amend or terminate the Purchase Plan, provided, however, that no such action may adversely affect any outstanding rights to purchase Common Stock. 401(K) PLAN The Company has established a tax-qualified employee savings and retirement plan (the "401(k) Plan"). The 401(k) Plan provides that each participant may contribute between 2% and 15% of his or her pre-tax gross compensation (up to a statutorily prescribed annual limit of $9,500 in 1997). Employees must be twenty-one years old to participate and are eligible on the first day of the quarter following six months as an employee of the Company. All amounts contributed by employee participants and earnings on these contributions are fully vested at all times. Employee participants may elect to invest their contributions in various established funds. LIMITATIONS OF DIRECTORS' AND EXECUTIVE OFFICERS' LIABILITY AND INDEMNIFICATION The Company's Restated Certificate of Incorporation provides that directors of the Company will not be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted by the Delaware General Corporation Law as currently in effect or as the same is subsequently amended. Such limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. The Company's Amended and Restated By-laws provide that the Company will indemnify its directors and executive officers and may indemnify its other officers, employees and agents to the fullest extent permitted by Delaware law. The Company is also empowered under its Amended and Restated By-laws to enter into indemnification contracts with its directors and officers and to purchase insurance on behalf of any person it is required or permitted to indemnify. Pursuant to this provision, the Company has entered into indemnification agreements with each of its directors and executive officers. 55

CERTAIN TRANSACTIONS Between November 1994 and July 1997, the Company completed several equity financings. The purchasers of the Company's stock included, among others, the following affiliates of the Company's Directors.
PURCHASER ------------------------------------------------------------------------Biotechvest L.P. (1)..................................................... Fruit of the Loom Senior Executive Officer Deferred Compensation Trust (1)................................................. Cross Atlantic Partners K/S (2).......................................... Cross Atlantic Partners II K/S (2)....................................... Cross Atlantic Partners III K/S (2)...................................... Oxford Bioscience Partners (Adjunct) L.P. (3)............................ Oxford Bioscience Partners (Bermuda) Limited Partnership (3)............. Oxford Bioscience Partners L.P. (3)...................................... Oxford Bioscience Management Partners (3)................................ NUMBER OF SHARES OF COMMON STOCK ------------------333,334 333,333 880,233 498,832 173,334 138,952 276,119 995,282 100,000

(1) Affiliated with Jeffrey D. Sollender, a Director. (2) Affiliated with Charles L. Dimmler III, a Director. (3) Affiliated with Alan G. Walton, a Director. In February 1996, Dr. Kouri, formerly the Senior Vice President and Chief Technical Officer of the Company, received 55,000 shares of Common Stock (the "Shares") pursuant to his Employment Agreement. Pursuant to the terms of a Stock Pledge Agreement, Dr. Kouri pledged the Shares as security for the Promissory Note. Following Dr. Kouri's resignation from the Company on October 15, 1996, the Promissory Note was canceled and the Company canceled the Shares effective January 1, 1997. To assist Mr. Gessler, the Company's Senior Vice President, Corporate Development and Chief Financial Officer, with his relocation, the Company loaned Mr. Gessler $50,000 in July 1996 pursuant to a Promissory Note. Pursuant to the terms of a Stock Pledge Agreement, the Promissory Note is secured by certain shares of Common Stock of the Company owned by Mr. Gessler. The Promissory Note provides that the loan balance will be forgiven upon the completion of this offering. In March 1997, the Company loaned Dr. Eastman, the Company's Vice President, Technology Management, $20,000, of which $11,000 remains outstanding. Such loan is non-interest bearing and becomes due at the end of 1997. The Company has entered employment agreements with each of its executive officers. See "Management--Employment Agreements" for a description of the employment agreements with Dr. Brennan and Mr. Gessler. The agreements with Dr. Brennan, Mr. Gessler, Dr. Elliston, Dr. Eastman and Mr. Passeri provide, among other things, for the acceleration of certain unvested options upon achievement of certain performance-based goals (including 80% vesting upon completion of this offering and the remaining 20% 180 days thereafter). The Company has granted options to certain of its directors and executive officers. The Company has also entered into an Indemnification Agreement with each of its directors and executive officers. The Company believes that all of the transactions set forth above were made on terms no less favorable to the Company than could have been obtained from unaffiliated third parties. All future transactions between the Company and its officers, directors, principal stockholders and their affiliates will be approved by a majority of the Board of Directors, including a majority of the disinterested directors, and will continue to be on terms no less favorable to the Company than could be obtained from unaffiliated third parties. 56

PRINCIPAL STOCKHOLDERS The following table sets forth certain information with respect to the beneficial ownership of the Company's Common Stock as of September 30, 1997, and as adjusted to reflect the sale of the shares of Common Stock offered hereby and the sale of 272,727 shares of Common Stock to Japan Tobacco, by (i) each of the Company's Named Executive Officers, (ii) each of the Company's directors, (iii) each holder of more than 5% of the Company's Common Stock and (iv) all current directors and executive officers as a group.
PERCENTAGE OF SHARES BENEFICIALLY OWNED (1) SHARES ---------------------------BENEFICIALLY BEFORE AFTER OWNED (1) OFFERING OFFERING ----------- ------------- ------------1,565,353 15.4% 11.6%

5% STOCKHOLDERS, DIRECTORS AND NAMED EXECUTIVE OFFICERS ----------------------------------------------------------------------------Alan G. Walton, Ph.D., D.Sc. (2)............................................. Oxford Bioscience Partners 315 Post Road West Westport, CT 06880 Oxford Bioscience Partners (3)............................................... c/o Alan G. Walton, Ph.D., D.Sc. 315 Post Road West Westport, CT 06880 Charles L. Dimmler III (4)................................................... Hambro Health International, Inc. 650 Madison Avenue, 21st Floor New York, NY 10022 Cross Atlantic Partners K/S (5).............................................. c/o Charles L. Dimmler III Hambro Health International, Inc. 650 Madison Avenue, 21st Floor New York, NY 10022 New York Life Insurance Company.............................................. c/o Mr. Dominique O. Semon 51 Madison Avenue New York, NY 10010 Altamira Management Ltd. (6)................................................. c/o Mr. Ian Ainsworth 250 Bloor Street West Suite 300 Toronto M4W1E6 Canada GIMV Investment Corporation.................................................. Karel Oomsstraat 37, 2018 Antwerpen Belgium Michael J. Brennan, M.D., Ph.D. (7).......................................... Gene Logic Inc. 10150 Columbia Road Columbia, MD 21046 Mark D. Gessler (8).......................................................... Jules Blake, Ph.D. (9)....................................................... G. Anthony Gorry, Ph.D. (10).................................................

1,560,353

15.4

11.6

1,557,399

15.4

11.6

1,552,399

15.4

11.6

676,767

6.7

5.1

652,020

6.4

4.9

526,465

5.2

3.9

486,000

4.7

3.6

240,000 14,500 5,000

2.3 * *

1.8 * *

57

5% STOCKHOLDERS, DIRECTORS AND NAMED EXECUTIVE OFFICERS ----------------------------------------------------------------------------Jeffrey D. Sollender (11).................................................... All directors and executive officers as a group (12 persons) (12)............

PERCENTAGE OF SHARES BENEFICIALLY OWNED (1) SHARES ---------------------------BENEFICIALLY BEFORE AFTER OWNED (1) OFFERING OFFERING ----------- ------------- ------------2,500 * * 4,979,221 46.0 35.3

* Represents beneficial ownership of less than 1%. (1) Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. Percentage of beneficial ownership is based on 10,109,650 shares of Common Stock outstanding as of September 30, 1997 and 13,382,377 shares of Common Stock outstanding after completion of this offering. (2) Includes an aggregate of 1,510,353 shares and warrants to purchase up to 50,000 shares held of record by Oxford Bioscience Partners, of which Dr. Walton is a general partner, and by entities related thereto. Also includes 5,000 shares subject to options held by Dr. Walton exercisable within 60 days of September 30, 1997. (3) Includes 100,000 shares held of record by Oxford Bioscience Management Partners, 276,119 shares and warrants to purchase 10,859 shares held of record by Oxford Bioscience Partners (Bermuda) Limited Partnership, 138,952 shares held of record by Oxford Bioscience Partners (Adjunct) L.P. and warrants to purchase 39,141 shares held of record by Oxford Bioscience Partners, L.P.. (4) Includes 880,233 shares held of record by Cross Atlantic Partners K/S, 498,832 shares held of record by Cross Atlantic Partners II K/S and 173,334 shares held of record by Cross Atlantic Partners III K/S. Also includes 5,000 shares subject to options held by Mr. Dimmler exercisable within 60 days of September 30, 1997. Mr. Dimmler is the Chief Investment Officer of Cross Atlantic Partners. (5) Includes 498,832 shares held of record by Cross Atlantic Partners II K/S and 173,334 shares held of record by Cross Atlantic Partners III K/S. (6) Includes 90,909 shares held of record by Altamira Science & Technology Fund, 136,364 shares held of record by Altamira Pooled U.S. Equity Fund and 113,636 shares held of record by Altamira Special Growth Fund. (7) Includes 100,000 shares held of record by the Brennan Family Limited Partnership and 131,000 shares subject to options exercisable upon completion of this offering. (8) Includes 30,000 shares held of record by the Gessler Family Limited Partnership and 140,000 shares subject to options exercisable upon completion of this offering. (9) Includes 14,500 shares subject to options exercisable within 60 days of September 30, 1997. (10) Includes 5,000 shares subject to options exercisable within 60 days of September 30, 1997. (11) Includes 2,500 shares subject to options held by Mr. Sollender exercisable within 60 days of September 30, 1997. (12) See footnotes (2), (4) and (7) through (11) above. 58

DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 60,000,000 shares of Common Stock, $.01 par value, and 10,000,000 shares of Preferred Stock, $.01 par value. COMMON STOCK As of September 30, 1997, there were 10,109,650 shares of Common Stock outstanding, after giving effect to the conversion of all outstanding shares of Preferred Stock into 9,281,185 shares of Common Stock. The holders of Common Stock are entitled to one vote per share on all matters to be voted on by the stockholders. Subject to preferences that may be applicable to any outstanding shares of Preferred Stock, holders of Common Stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefor. In the event of a liquidation, dissolution or winding up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of Preferred Stock. Holders of Common Stock have no preemptive, conversion, subscription or other rights. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are, and all shares of Common Stock to be outstanding upon completion of this offering will be, fully paid and nonassessable. PREFERRED STOCK Upon the closing of this offering, all outstanding shares of Preferred Stock will be converted into 9,281,185 shares of Common Stock. See Note 9 of Notes to Financial Statements for a description of the currently outstanding Preferred Stock. Following the conversion, the Company's Restated Certificate of Incorporation will be amended and restated to delete all references to such shares of Preferred Stock. Under the Certificate of Incorporation, as amended and restated upon the closing of this offering (the "Restated Certificate"), the Board has the authority, without further action by stockholders, to issue up to 10,000,000 shares of Preferred Stock in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon such Preferred Stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the Common Stock. The issuance of Preferred Stock could adversely affect the voting power of holders of Common Stock and reduce the likelihood that such holders will receive dividend payments and payments upon liquidation. Such issuance could have the effect of decreasing the market price of the Common Stock. The issuance of Preferred Stock could have the effect of delaying, deterring or preventing a change in control of the Company. The Company has no present plans to issue any additional shares of Preferred Stock. WARRANTS As of September 30, 1997, there were warrants outstanding to purchase an aggregate of 162,576 shares of the Company's Common Stock at a weighted average exercise price of $3.10 per share. In August 1995, the Company issued warrants to purchase an aggregate of 50,000 shares of Common Stock in connection with an equity financing. Such warrants are exercisable for $1.60 per share and expire August 31, 2005. In March 1997, the Company issued a warrant to purchase 25,758 shares of Common Stock at an exercise price of $2.20 per share with an expiration date of December 31, 2002 in connection with an equipment loan agreement. Such loan agreement provides for the grant of additional warrants in the event the Company draws down on the loan. Pursuant to such provision, in September 1997 the Company issued an additional warrant to purchase 4,293 shares of Common Stock at an exercise price of $2.20 per share with an expiration date of December 31, 2002. In April 1997, in connection with the establishment of capital lease facilities, the Company issued a warrant to purchase 13,636 shares of Common Stock at an 59

exercise price of $2.20 per share. Such warrant expires November 2002. In August 1997, in connection with Company's facilities lease, the Company issued a warrant to purchase 20,000 shares of Common Stock at an exercise price of $5.40. Such warrant will expire upon the completion of this offering. The Company issued a warrant to purchase 48,889 shares of its Common Stock at an exercise price of $4.50 per share to Hambrecht & Quist LLC for services related to the Company's most recent preferred stock financing which closed on July 15, 1997. Such warrant expires upon completion of this offering. REGISTRATION RIGHTS After this offering, the holders of 9,281,185 shares of Common Stock and the holders of warrants to purchase 30,051 shares of Common Stock will be entitled to certain rights with respect to the registration of such shares under the Securities Act, pursuant to an Amended and Restated Investor Rights Agreement dated July 15, 1997 (the "Investor Rights Agreement"). Under the terms of the Investor Rights Agreement, if the Company proposes to register any of its securities under the Securities Act, either for its own account or for the account of other security holders exercising registration rights, such holders are entitled to notice of such registration and are entitled, subject to certain limitations, to include shares therein. Commencing with the date that is three months after this offering, the holders may also require the Company to file a registration statement under the Securities Act with respect to their shares on two occasions, and the Company is required to use its best efforts to effect such registration. Furthermore, the holders may require the Company to register their shares on Form S-3 when such form becomes available to the Company. Generally, the Company is required to bear all registration expenses incurred in connection with any such registrations, but not including any underwriting discounts and selling commissions. These rights are subject to certain conditions and limitations, among them the right of the underwriters of an offering to limit the number of shares included in such registration. DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS The Company is governed by the provisions of Section 203 of the Delaware Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of the corporation's voting stock. The existence of this provision would be expected to have anti-takeover effects with respect to transactions not approved in advance by the Board of Directors, such as discouraging takeover attempts that might result in a premium over the market price of the Common Stock. The Company's Restated Certificate provides for a Board of Directors that is divided into three Classes. The Directors in Class I hold office until the first annual meeting of stockholders following this offering, the Directors in Class II hold office until the second annual meeting of stockholders following this offering and the Directors in Class III hold office until the third annual meeting of stockholders following this offering, (or, in each case, until their successors are duly elected and qualified or until their earlier resignation, removal from office or death), and, after each such election, the Directors in each such class will then serve in succeeding terms of three years and until their successors are duly elected and qualified. The classification system of electing Directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of the Company and may maintain the incumbency of the Board of Directors, as the classification of the Board of Directors generally increases the difficulty of replacing a majority of the directors. The Company's Restated Certificate provides further that any action required or permitted to be taken by stockholders of the Company must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing. The Company's Restated Certificate also 60

specifies that the authorized number of directors may be changed only by resolution of the Board of Directors. In addition, the Company's Amended and Restated By-laws provide that special meetings of the stockholders of the Company may be called only by the Chairman of the Board, the President of the Company or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors. These and other provisions contained in the Restated Certificate and the Company's Amended and Restated By-laws could delay or make more difficult certain types of transactions involving an actual or potential change in control of the Company or its management (including transactions in which stockholders might otherwise receive a premium for their shares over then current prices) and may limit the ability of stockholders to remove current management of the Company or approve transactions that stockholders may deem to be in their best interests and, therefore, could adversely affect the price of the Company's Common Stock. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Company's Common Stock is Chase Mellon Shareholder Services. SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has been no public market for the Common Stock of the Company. Future sales of substantial amounts of Common Stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after the offering because of certain contractual and legal restrictions on resale described below, sales of substantial amounts of Common Stock of the Company in the public market after the restrictions lapse could adversely affect the prevailing market price and the ability of the Company to raise equity capital in the future. Upon completion of the offering, the Company will have 13,382,377 shares of Common Stock outstanding, assuming no exercise of currently outstanding options. Of these shares, the 3,000,000 shares sold in this offering (plus any additional shares sold upon exercise of the Underwriters' over-allotment option) will be freely transferable without restriction under the Securities Act, unless they are held by "affiliates" of the Company as that term is used under the Securities Act and the regulations promulgated thereunder ("Affiliates"). The remaining 10,382,377 shares of Common Stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 of the Securities Act (the "Restricted Shares"). Restricted Shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act. As a result of contractual restrictions and the provisions of Rules 144 and 701, additional shares will be available for sale in the public market as follows: (i) no Restricted Shares will be eligible for immediate sale on the date of this Prospectus; (ii) approximately 5,732 Restricted Shares will be eligible for sale 90 days after the date of this Prospectus; (iii) approximately 5,609,475 Restricted Shares will be eligible for sale 180 days after the effective date of this offering upon expiration of lock-up agreements and upon expiration of their respective holding periods under Rule 144; and (iv) the remainder of the Restricted Shares will be eligible for sale from time to time thereafter upon expiration of their respective holding periods under Rule 144. In addition, 1,200,752 shares issuable upon exercise of vested stock options will become eligible for sale 180 days after the effective date of this offering upon expiration of lock-up agreements. The holders of 9,281,185 shares of Common Stock and the holders of warrants to purchase 30,051 shares of Common Stock have the right in certain circumstances to require the Company to register their shares under the Securities Act for resale to the public beginning three months after the effective date of this offering. If such holders, by exercising their demand registration rights, cause a large number of shares to be registered and sold in the public market, such sales could have an adverse effect on the market price for the Company's Common Stock. If the Company were required to include in a Company-initiated registration shares held by such holders pursuant to the exercise of their piggyback registration rights, such sales may 61

have an adverse effect on the Company's ability to raise needed capital. In addition, the Company expects to file a registration statement on Form S-8 registering a total of approximately 6,134,268 shares of Common Stock subject to outstanding stock options or reserved for issuance under the Company's equity incentive plans. Such registration statement is expected to be filed and to become effective 180 days following the effective date of this offering. Shares registered under such registration statement will, subject to Rule 144 volume limitations applicable to Affiliates, be available for sale in the open market, unless such shares are subject to vesting restrictions with the Company or the lock-up agreements described above. In general, under Rule 144 as currently in effect, beginning 90 days after the effective date of the offering, an Affiliate of the Company, or person (or persons whose shares are aggregated) who has beneficially owned restricted shares (as defined under Rule 144) for at least one year is entitled to sell within any three-month period a number of shares that does not exceed the greater of (i) one percent of the then outstanding shares of the Company's Common Stock or (ii) the average weekly trading volume of the Company's Common Stock in the Nasdaq National Market during the four calendar weeks immediately preceding the date on which notice of the sale is filed with the Commission. Sales pursuant to Rule 144 are subject to certain requirements relating to the manner of sale, notice, and the availability of current public information about the Company. A person (or persons whose shares are aggregated) who was not an Affiliate of the Company at any time during the 90 days immediately preceding the sale and who has beneficially owned restricted shares for at least two years is entitled to sell such shares under Rule 144(k) without regard to the limitations described above. An employee, officer or director of or consultant to the Company who purchased or was awarded shares or options to purchase shares pursuant to a written compensatory plan or contract is entitled to rely on the resale provisions of Rule 701 under the Securities Act, which permits Affiliates and non-Affiliates to sell their Rule 701 shares without having to comply with Rule 144's holding period restrictions, in each case commencing 90 days after the date of this Prospectus. In addition, non-Affiliates may sell Rule 701 shares without complying with the public information, volume and notice provisions of Rule 144. 62

UNDERWRITING The Underwriters named below (the "Underwriters"), acting through their representatives, BancAmerica Robertson Stephens, Hambrecht & Quist LLC and UBS Securities LLC (the "Representatives"), have severally agreed with the Company, subject to the terms and conditions of the Underwriting Agreement, to purchase from the Company the number of shares of Common Stock set forth opposite their respective names below. The Underwriters are committed to purchase and pay for all such shares if any are purchased.
UNDERWRITER -------------------------------------------------------------------------------BancAmerica Robertson Stephens.................................................. Hambrecht & Quist LLC........................................................... UBS Securities LLC.............................................................. Total....................................................................... NUMBER OF SHARES ------------

-----------3,000,000 -----------------------

The Company has been advised by the Representatives that the Underwriters propose to offer the shares of Common Stock to the public at the initial public offering price set forth on the cover page of this Prospectus and to certain dealers at such price, less a concession not in excess of $ per share, of which $ may be reallowed to other dealers. After the initial public offering, the public offering price, concession and reallowance to dealers may be reduced by the Representatives. No such reduction shall change the amount of proceeds to be received by the Company as set forth on the cover page of this Prospectus. The Company has granted to the Underwriters an option, exercisable during the 30-day period after the date of this Prospectus, to purchase up to 450,000 additional shares of Common Stock at the same price per share as the Company will receive for the 3,000,000 shares that the Underwriters have agreed to purchase. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage of such additional shares that the number of shares of Common Stock to be purchased by it shown in the above table represents as a percentage of the 3,000,000 shares offered hereby. If purchased, such additional shares will be sold by the Underwriters on the same terms as those on which the 3,000,000 shares are being sold. The Company will be obligated, pursuant to the option, to sell shares to the extent the option is exercised. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of shares of Common Stock offered hereby. The Underwriting Agreement contains covenants of indemnity between the Underwriters and the Company against certain civil liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the Underwriting Agreement. Each officer and director of the Company and certain stockholders together holding approximately 10,326,645 shares of Common Stock (including Japan Tobacco) have agreed in writing with the Representatives (the "Lock-Up Agreements") that, until 180 days after the Registration Statement is declared effective by the Commission, subject to certain limited exceptions, they will not, directly or indirectly, sell, offer, contract to sell, pledge, grant any option to purchase or otherwise dispose of any shares of Common Stock, any options or warrants to purchase any shares of Common Stock, or any securities convertible into or exchangeable for, or any other rights to purchase or acquire, Common Stock owned directly by them or acquired by them after the date of the Lock-Up Agreements, or which may be deemed to be beneficially owned by them, without the prior written consent of BancAmerica Robertson Stephens. Approximately 5,609,475 of such shares will be eligible for immediate public sale following expiration of the lock-up period pursuant to Rule 144. BancAmerica Robertson Stephens may, in its sole discretion and at any time without notice, release all or any portion of the securities subject to the Lock-Up Agreements. In addition, the Company has agreed that, until 180 days after the Registration Statement is declared effective by the 63

Commission, the Company will not, without the prior written consent of BancAmerica Robertson Stephens, subject to certain limited exceptions, sell, offer, contract to sell, pledge, grant any option to purchase or otherwise dispose of any shares of Common Stock, any options or warrants to purchase any shares of Common Stock, or any securities convertible into or exchangeable for, or any other rights to purchase or acquire, shares of Common Stock, other than the Company's sale of shares in this offering and the sale of shares to Japan Tobacco, the issuance of Common Stock upon the exercise of the outstanding warrants or options, or the Company's grant of options and issuance of stock under existing employee stock option or stock purchase plans. See "Shares Eligible for Future Sale." The Underwriters do not intend to confirm sales to any account over which they exercise discretionary authority. Prior to this offering, there has been no public market for the Common Stock of the Company. Consequently, the initial public offering price for the Common Stock offered hereby will be determined through negotiations among the Company and the Representatives. Among the factors to be considered in such negotiations include prevailing market conditions, certain financial information of the Company, market valuations of other companies that the Company and the Representatives believe to be comparable to the Company, estimates of the business potential of the Company, the present stage of the Company's development and other factors deemed relevant. The Representatives have advised the Company that, pursuant to Regulation M under the Securities Act, certain persons participating in the offering may engage in transactions, including stabilizing bids, syndicate covering transactions or the imposition of penalty bids which may have the effect of stabilizing or maintaining the market price of the Common Stock at a level above that which might otherwise prevail in the open market. A "stabilizing bid" is a bid for or the purchase of the Common Stock. A "syndicate covering transaction" is the bid for or the purchase of the Common Stock on behalf of the Underwriters to reduce a short position incurred by the Underwriters in connection with the offering. A "penalty bid" is an arrangement permitting the Representatives to reclaim the selling concession otherwise accruing to an Underwriter or syndicate member in connection with the offering if the Common Stock originally sold by such Underwriter or syndicate member is purchased by the Representatives in a syndicate covering transaction and has therefore not been effectively placed by such Underwriter or syndicate member. The Representatives have advised the Company that such transactions may be effected on the Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time. H&Q Gene Logic Investors, LP, a California limited partnership and a related party to Hambrecht & Quist LLC, one of the Representatives, owns 111,111 shares of the Company's Series C Preferred Stock, $.01 par value per share, which will automatically convert into 111,111 shares of the Company's Common Stock upon the closing of this offering. In addition, Hambrecht & Quist LLC owns a warrant which is exercisable for the purchase of 48,889 shares of the Company's Series C Preferred Stock at an exercise price of $4.50 per share. Hambrecht & Quist LLC received the warrant from the Company, in addition to a cash payment, as compensation for Hambrecht & Quist LLC's services as placement agent in connection with the Company's Series C Preferred Stock financing, which closed on July 15, 1997. The warrant will expire upon the closing of this offering. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Cooley Godward LLP, San Diego, California. Certain legal matters will be passed upon for the Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. EXPERTS The financial statements of the Company as of December 31, 1995 and 1996 and for the period from September 22, 1994 (inception) through December 31, 1994, and for the years ended December 31, 1995 64

and 1996 included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included in reliance upon the authority of said firm as experts in giving said reports. ADDITIONAL INFORMATION The Company has filed with the Commission a Registration Statement on Form S-1 under the Securities Act, with respect to the Common Stock offered hereby. As permitted by the rules and regulations of the Commission, this Prospectus, which is a part of the Registration Statement, omits certain information, exhibits, schedules and undertakings set forth in the Registration Statement. For further information pertaining to the Company and the Common Stock offered hereby, reference is made to such Registration Statement and the exhibits and schedules thereto. Statements contained in this Prospectus as to the contents or provisions of any contract or other document referred to herein are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. A copy of the Registration Statement may be inspected without charge at the office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of all or any part of the Registration Statement may be obtained from such offices upon the payment of the fees prescribed by the Commission. In addition, registration statements and certain other filings made with the Commission through its Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system are publicly available through the Commission's web site on the Internet's World Wide Web, located at http://www.sec.gov. The Registration Statement, including all exhibits thereto and amendments thereof, has been filed with the Commission through EDGAR. 65

GENE LOGIC INC. INDEX TO FINANCIAL STATEMENTS
PAGE ----Report of Independent Public Accountants................................................................... Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997 (unaudited).............................. Statements of Operations for the period from September 22, 1994 (inception) through December 31, 1994, the years ended December 31, 1995 and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)......................................................................................... Statements of Stockholders' Equity for the period from September 22, 1994 (inception) through December 31, 1994, the years ended December 31, 1995 and 1996 and the six months ended June 30, 1997 (unaudited)...... Statements of Cash Flows for the period from September 22, 1994 (inception) through December 31, 1994, the years ended December 31, 1995 and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)......................................................................................... Notes to Financial Statements.............................................................................. F-2 F-3

F-4 F-5

F-6 F-7

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Gene Logic Inc.: We have audited the accompanying balance sheets of Gene Logic Inc. (a Delaware corporation) as of December 31, 1995 and 1996, and the related statements of operations, stockholders' equity and cash flows for the period from September 22, 1994 (inception) through December 31, 1994, and the years ended December 31, 1995 and 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gene Logic Inc. as of December 31, 1995 and 1996, and the results of its operations and its cash flows for the period from September 22, 1994 (inception) through December 31, 1994, and the years ended December 31, 1995 and 1996, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP Baltimore, Maryland October 6, 1997

F-2

GENE LOGIC INC. BALANCE SHEETS
PRO FORMA STOCKHOLDERS' EQUITY AS OF JUNE 30, 1997 ----------(UNAUDITED)

DECEMBER 31, -------------------1995 1996 --------- --------ASSETS Current Assets: Cash and cash equivalents...................................... Marketable securities available for sale....................... Prepaid expenses............................................... Other current assets........................................... Total Current Assets......................................... Property and Equipment, net...................................... Notes Receivable from Employees.................................. Intangibles and Other Assets, net................................ Total Assets.................................................

JUNE 30, 1997 ----------(UNAUDITED) $4,899,522 199,859 354,527 24,076 ----------5,477,984 2,296,156 64,235 371,361 ----------$8,209,736 ---------------------

$ 348,478 -----------348,478 11,666 -62,444 --------$ 422,588 -----------------

$1,137,130 4,534,353 37,424 76,403 --------5,785,310 1,757,240 102,896 171,506 --------$7,816,952 -----------------

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable............................................... $ 17,294 Accrued expenses............................................... 86,249 Current portion of capital lease obligation.................... -Current portion of long-term debt.............................. -Deferred revenue............................................... ---------Total Current Liabilities.................................... 103,543 Deferred Revenue................................................. -Capital Lease Obligation......................................... -Long-Term Debt................................................... ---------Total Liabilities............................................ 103,543 --------Commitments and Contingencies Series A Convertible Preferred Stock, $.01 par value; 333,333 shares authorized; 333,333 shares issued and outstanding as of December 31, 1995 and 1996 and June 30, 1997, liquidation preference of $1.50 per share.................................. Series A-1 Convertible Preferred Stock, $.01 par value; 462,500 shares authorized; 412,500 shares issued and outstanding as of December 31, 1995 and 1996 and June 30, 1997, liquidation preference of $1.60 per share.................................. Series B Convertible Preferred Stock, $.01 par value; 4,154,167 shares authorized; 4,090,909 shares issued and outstanding as of December 31, 1996 and June 30, 1997, liquidation preference of $2.20 per share............................................. Series C Convertible Preferred Stock, $.01 par value; 4,600,000 shares authorized, liquidation preference of $4.50 per share... Stockholders' Equity: Common stock, $.01 par value; 6,000,000 shares authorized; 280,000, 692,733 and 637,733 shares issued and outstanding as of December 31, 1995 and 1996 and June 30, 1997, respectively................................................. Additional paid-in capital..................................... Deferred compensation on stock options, net.................... Unrealized losses on marketable securities..................... Accumulated deficit............................................ Total Stockholders' Equity................................... Total Liabilities and Stockholders' Equity...................

$

91,074 997,710 106,195 ----------1,194,979 -339,699 ---------1,534,678 ---------

$ 137,852 322,726 110,512 239,338 2,000,000 ----------2,810,428 833,333 283,342 807,181 ----------4,734,284 -----------

500,000

500,000

500,000

--

652,825

653,722

654,170

--

---

9,327,674 --

9,694,934 --

---

2,800 (1,100) --(835,480) --------(833,780) --------$ 422,588 -----------------

6,927 6,377 9,773 62,973 -(55,886) (13,215) (1,321) (4,202,607) (7,385,795) --------- ----------(4,199,122) (7,373,652) --------- ----------$7,816,952 $8,209,736 --------- ------------------- -----------

99,189 29,954,071 (55,886) (1,321) (7,385,795) ----------22,610,258 -----------

The accompanying notes are an integral part of these balance sheets. F-3

GENE LOGIC INC. STATEMENTS OF OPERATIONS
PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 -----------------Revenues............................ Expenses: Research and development.......... General and administrative........ Total expenses................ Loss from operations.......... Interest Income, net................ Net loss...................... Accretion of Mandatory Redemption Value of Preferred Stock.......... Net loss attributable to common shareholders.................... Pro Forma Net Loss Per Common Share............................. Shares Used in Computing Pro Forma Net Loss Per Common Share......... $ $ --------44,438 45,966 -------90,404 -------(90,404) --------(90,404) --------(90,404) ---------------

YEAR ENDED DECEMBER 31, -----------------------1995 1996 ---------- -----------$ ----------$ -------------

SIX MONTHS ENDED JUNE 30, -------------------------1996 1997 ------------ -----------(UNAUDITED) $ -- $ 166,667 ------------ ------------

485,688 1,747,128 491,266 1,836,829 258,491 1,349,226 386,208 1,236,089 ---------- ------------ ------------ -----------744,179 3,096,354 877,474 3,072,918 ---------- ------------ ------------ -----------(744,179) (3,096,354) (877,474) (2,906,251) -221,302 18,104 90,771 ---------- ------------ ------------ -----------(744,179) (2,875,052) (859,370) (2,815,480) 897 ---------492,075 -----------157,736 -----------367,708 ------------

$ (745,076) $ (3,367,127) $ (1,017,106) $ (3,183,188) ---------- ------------ ------------ --------------------- ------------ ------------ -----------$ (0.60) ----------------------4,753,217 ----------------------$ (0.48) ----------------------5,807,265 -----------------------

The accompanying notes are an integral part of these statements. F-4

GENE LOGIC INC. STATEMENTS OF STOCKHOLDERS' EQUITY
PREFERRED STOCK ---------------------NUMBER OF SHARES AMOUNT ---------- -----------266,666 ----------266,666 -66,667 412,500 -----------745,833 -4,090,909 ------------4,836,742 -$ --STOCKHOLDERS' EQUITY ---------------------------------------------------------------COMMON STOCK UNREALIZED --------------------- ADDITIONAL LOSSES ON NUMBER PAR PAID-IN DEFERRED MARKETABLE OF SHARES VALUE CAPITAL COMPENSATION SECURITIES ---------- --------- ---------- ------------- --------------100,000 -----------100,000 180,000 -------------280,000 412,733 -------------692,733 (55,000) $ -1,000 $ -(1,000) $ --$ ---

Inception (September 22, 1994)......................... Issuance of common stock...... Issuance of Series A Convertible Preferred Stock....................... Net Loss...................... Balance at December 31, 1994.... Issuance of common stock...... Issuance of Series A Convertible Preferred Stock....................... Issuance of Series A-1 Convertible Preferred Stock, net of issuance costs....... Accretion of mandatory redemption value of preferred stock............. Net Loss...................... Balance at December 31, 1995.... Issuance of common stock...... Issuance of Series B Convertible Preferred Stock, net of issuance costs....... Accretion of mandatory redemption value of preferred stock............. Net change in unrealized losses from marketable securities.................. Net Loss...................... Balance at December 31, 1996.... Cancellation of common stock (unaudited)................. Accretion of mandatory redemption value of preferred stock (unaudited)................. Net change in unrealized losses from marketable securities (unaudited)...... Deferred compensation from stock options (unaudited)... Amortization of deferred compensation (unaudited).... Net Loss (unaudited).......... Balance at June 30, 1997 (unaudited)................... Pro forma issuance of Series C Convertible Preferred Stock, net of issuance costs (unaudited)................... Pro forma conversion of Preferred Stock to Common Stock (unaudited)............. Pro forma balance at June 30, 1997 (unaudited)..............

400,000 ----------400,000 -100,000 651,928 897 ----------1,152,825 -8,836,496 492,075 -----------10,481,396 --

----------1,000 1,800 ------------2,800 4,127 ------------6,927 (550)

-------------- ------------(1,000) -(100) ------

--------------------------------------(13,215) --------------(13,215) --

-------------- ------------(1,100) -10,873 --------------9,773 (7,700) -------------------

--------------4,836,742

367,708 -------------10,849,104

--------------637,733

-------------6,377

--60,900 -----------62,973

--(60,900) 5,014 -------------(55,886)

-11,894 ----------------(1,321)

4,444,443

19,134,806

--

-92,812 --------$ 99,189 -----------------

-29,891,098 ----------

---------------

---------------$ (1,321) ---------------------------

(9,281,185) (29,983,910) 9,281,185 ---------- ---------- ----------------------------ACCUMULATED DEFICIT -----------$ --$ -------------------9,918,918 -------------------

$29,954,071 $ (55,886) ---------- ---------------------- -------------

Inception (September 22, 1994)......................... Issuance of common stock...... Issuance of Series A Convertible Preferred Stock....................... Net Loss...................... Balance at December 31, 1994.... Issuance of common stock...... Issuance of Series A Convertible Preferred Stock....................... Issuance of Series A-1 Convertible Preferred Stock, net of issuance costs....... Accretion of mandatory redemption value of preferred stock............. Net Loss...................... Balance at December 31, 1995.... Issuance of common stock...... Issuance of Series B

-(90,404) -----------(90,404) ---(897) (744,179) -----------(835,480) --

Convertible Preferred Stock, net of issuance costs....... Accretion of mandatory redemption value of preferred stock............. Net change in unrealized losses from marketable securities.................. Net Loss...................... Balance at December 31, 1996.... Cancellation of common stock (unaudited)................. Accretion of mandatory redemption value of preferred stock (unaudited)................. Net change in unrealized losses from marketable securities (unaudited)...... Deferred compensation from stock options (unaudited)... Amortization of deferred compensation (unaudited).... Net Loss (unaudited).......... Balance at June 30, 1997 (unaudited)................... Pro forma issuance of Series C Convertible Preferred Stock, net of issuance costs (unaudited)................... Pro forma conversion of Preferred Stock to Common Stock (unaudited)............. Pro forma balance at June 30, 1997 (unaudited)..............

-(492,075) -(2,875,052) -----------(4,202,607) --

(367,708) ---(2,815,480) -----------(7,385,795)

-------------$(7,385,795) -----------------------

The accompanying notes are an integral part of these statements. F-5

GENE LOGIC INC. STATEMENTS OF CASH FLOWS
PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 -----------------Cash Flows From Operating Activities: Net loss.................................... Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization............. Write off of deferred financing fee....... Cancellation of note receiveable.......... Amortization of deferred compensation..... Changes in operating assets and liabilities: Prepaid expenses.......................... Other current assets...................... Intangibles and other assets.............. Accounts payable.......................... Accrued expenses.......................... Deferred revenue.......................... Net Cash Flows From Operating Activities............................ Cash Flows From Investing Activities: Purchases of property and equipment......... Increase in notes receivable from employees................................. Purchase of marketable securities available for sale.................................. Proceeds from sale and maturity of marketable securities available for sale...................................... Net Cash Flows From Investing Activities............................ Cash Flows From Financing Activities: Proceeds from issuance of common stock...... Proceeds from issuance of preferred stock... Payments for stock issuance costs........... Proceeds from equipment loan................ Repayments of capital lease obligation and equipment loan............................ Net Cash Flows From Financing Activities............................ Net Increase in Cash and Cash Equivalents..... Cash and Cash Equivalents, beginning of period...................................... Cash and Cash Equivalents, end of period...... Supplemental Disclosure: Interest expense paid....................... $ (90,404) ----(11,445) ------------(101,849) ---------------------------400,000 ----------400,000 -------298,151 --------$ 298,151 --------------$ ----------------

YEAR ENDED DECEMBER 31, --------------------1995 1996 --------- ----------

SIX MONTHS ENDED JUNE 30, ---------------------1996 1997 ---------- ---------(UNAUDITED)

$(744,179) $(2,875,052) $ (859,370) $(2,815,480) 1,395 ---67,602 2,500 --4,551 2,500 --224,388 -43,258 5,014

11,445 (37,424) (7,698) (317,103) -(76,403) (12,250) 52,327 (63,139) (114,385) (49,447) (201,266) 17,294 73,780 34,512 46,778 86,249 911,461 32,953 (674,984) ---2,833,333 --------- ---------- ---------- ---------(690,935) (2,047,921) (854,249) (803,735) --------- ---------- ---------- ---------(12,366) (1,339,207) -----------(102,896) (84,979) -(761,893) (12,847) -4,346,388 ----------

(4,547,568) (4,487,550) ---------------------

(12,366) (5,989,671) (4,572,529) 3,571,648 --------- ---------- ---------- ---------1,700 760,000 (8,072) ----------753,628 --------50,327 298,151 --------$ 348,478 ----------------$ -----------------15,000 9,000,000 (163,504) -11,366 7,625,000 (163,504) ----1,084,362 (89,883) ---------994,479 ---------3,762,392 1,137,130 ---------$4,899,522 ------------------$ 32,495 -------------------

(25,252) ----------- ---------8,826,244 ---------788,652 348,478 ---------$1,137,130 ------------------$ 9,024 ------------------7,472,862 ---------2,046,084 348,478 ---------$2,394,562 ------------------$ --------------------

The accompanying notes are an integral part of these statements. F-6

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994, 1995 AND 1996 AND JUNE 30, 1996 AND 1997 NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION AND BUSINESS Gene Logic Inc. (the "Company"), formerly Senatics Corporation, was incorporated on September 22, 1994, to commercialize technologies for the discovery of disease-associated genes for the development of therapeutic and diagnostic products. The Company was previously in the development stage and has yet to generate any significant revenues. UNAUDITED INTERIM FINANCIAL INFORMATION The interim financial statements of the Company for the six months ended June 30, 1996 and 1997, included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments necessary to present fairly the financial position of the Company at June 30, 1997, and the results of its operations and cash flows for the six months ended June 30, 1996 and 1997. The results of operations for the six months ended June 30, 1997 are not necessarily indicative of results to be expected for the full year. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in the disclosures of contingent assets and liabilities. While actual results could differ from those estimates, management believes that actual results will not be materially different from amounts provided in the accompanying financial statements. NEW PRONOUNCEMENTS In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 simplifies the standards for computing earnings per share previously found in Accounting Principles Board Opinion No. 15, "Earnings Per Share" ("APB Opinion No. 15"). It replaces the presentation of primary EPS with a presentation of basic EPS and requires a reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to primary EPS pursuant to APB Opinion No. 15. SFAS No. 128 is effective for interim periods and fiscal years ending after December 15, 1997, and early adoption is not permitted. When adopted, it will require restatement of prior years' EPS. The adoption of SFAS No. 128 will have no impact on the Company. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 sets standards for F-7

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): reporting and presentation of comprehensive income and its components in financial statements. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997, and early adoption is permitted. When adopted, it will require reclassification adjustments and changes in presentation for all prior periods shown. The impact of the adoption of SFAS No. 130 on the Company has not been determined. CASH AND CASH EQUIVALENTS Cash and cash equivalents are defined as liquid investments with original maturities of 90 days or less that are readily convertible into cash. All other investments are reported as marketable securities available for sale. Cash and cash equivalents as of December 31, 1995 and 1996 and June 30, 1997, are comprised of:
DECEMBER 31, -----------------------1995 1996 ---------- -----------Cash...................................................................... Money market mutual fund.................................................. $ 348,478 ----------$ 348,478 ------------------$ 117,407 1,019,723 -----------$ 1,137,130 ----------------------JUNE 30, 1997 -----------(UNAUDITED) $ 89,689 4,809,833 -----------$ 4,899,522 -----------------------

MARKETABLE SECURITIES AVAILABLE FOR SALE All marketable securities are classified as available for sale. Available for sale securities are carried at fair value, with unrealized gains and losses reported as a separate component of stockholder's equity. Realized gains and losses and declines in value judged to be other than temporary for available for sale securities are included in other income. PROPERTY AND EQUIPMENT Property and equipment is carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Furniture and fixtures............................................ Computers and office equipment.................................... Lab equipment..................................................... 10 years 5 years 5 years

Equipment under capital leases and leasehold improvements are depreciated and amortized over their useful life, or the term of the lease, whichever is shorter. INTANGIBLES AND OTHER ASSETS Other assets consists primarily of organization costs, patent costs, trademarks and licenses. These amounts are being amortized over periods of five to seventeen years. Accumulated amortization relating to other assets was $0, $695, $3,518, $2,106, and $4,929 as of December 31, 1994, 1995, and 1996, and June 30, 1996 and 1997, respectively. The Company's success is heavily dependent upon its proprietary technologies. The Company depends upon a combination of patents, trade secrets, copyright and trademark laws, license agreements, nondisclosure and other contractual provisions and various other security measures to protect its technology rights. F-8

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): RESEARCH AND DEVELOPMENT Research and development costs are charged to operations when incurred. REVENUE RECOGNITION The Company recognizes revenue from research and development support and technology and database access fees as they are earned under the terms of the agreement. Revenue is deferred for fees received before earned. Revenues related to the achievement of certain milestones are recognized when earned. INCOME TAXES The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. STOCK OPTION PLANS Prior to January 1, 1996, the Company's policy was to account for its stock options plans in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB Opinion No. 25"), and related interpretations. As such, compensation expense is recorded on the date of grant only if the current fair value of the underlying stock exceeds the exercise price. On January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net earnings and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the fair-value based method defined in SFAS No. 123 had been applied. The Company elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. The Company uses the Black-Scholes option pricing model to estimate the fair value of options and warrants granted. PRO FORMA NET LOSS PER COMMON SHARE Pro forma net loss per common share is computed using the weighted average number of shares of common stock outstanding giving effect to the conversion of convertible preferred shares that will automatically convert upon completion of the Company's initial public offering (using the if-converted method) from the original date of issuance. Common equivalent shares from stock options and warrants are excluded from the computation for all periods as their effect is antidilutive, except that, pursuant to the Securities and Exchange Commission Staff Accounting Bulletins, common and common equivalent shares issued during the 12-month period prior to the initial filing of the proposed offering at prices below the assumed public offering price have been included in the calculation as if they were outstanding for all periods presented. F-9

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): The conversion of preferred stock will significantly reduce the net loss per common share, decreasing the relevance of historical net loss per common share information. As a result, historical net loss per common share is not shown. NOTE 2. MARKETABLE SECURITIES: The following is a summary of the Company's investment portfolio as of December 31, 1995 and 1996 and June 30, 1997:
AMORTIZED COST -----------$ -------------$ -----------------------2,483,352 2,064,216 -----------$ 4,547,568 ----------------------201,180 ------------$ 201,180 ----------------------$ GROSS UNREALIZED LOSSES ----------------------$ ---------------------$ (13,215) -----------$ (13,215) --------------------(1,321) -----------$ (1,321) --------------------$ $

December 31, 1995 Unit Investment Trust................................................... Government Securities................................................... Total................................................................. December 31, 1996 Unit Investment Trust................................................... Government Securities................................................... Total................................................................. June 30, 1997 (unaudited) Unit Investment Trust................................................... Government Securities................................................... Total.................................................................

FAIR VALUE -----------$ -------------$ -----------------------$ 2,470,137 2,064,216 -----------$ 4,534,353 ----------------------199,859 ------------$ 199,859 ----------------------$

$

All marketable securities mature within one year or have no stated maturity. As of December 31, 1996 and June 30, 1997, all of the Company's investments were classified as current as the Company may not hold its investments until maturity in order to take advantage of market conditions. During the six months ended June 30, 1997, a portion of the Unit Investment Trust was sold for total proceeds of $2,256,990, resulting in realized losses of $11,894. NOTE 3. PROPERTY AND EQUIPMENT: Property and equipment includes the following as of December 31, 1995 and 1996 and June 30, 1997:
JUNE 30, 1997 -----------(UNAUDITED) $ -$ 105,061 $ 134,068 -276,912 659,170 12,366 932,479 1,278,747 -471,146 471,146 -37,121 41,481 --------- ------------ -----------12,366 1,822,719 2,584,612 (700) (65,479) (288,456) --------- ------------ -----------$ 11,666 $ 1,757,240 $ 2,296,156 --------- ------------ -------------------- ------------ -----------DECEMBER 31, ----------------------1995 1996 --------- ------------

Furniture and fixtures................................. Computers and office equipment......................... Lab equipment.......................................... Lab equipment under capital lease...................... Leasehold improvements................................. Less--Accumulated depreciation......................... Property and Equipment, net............................

F-10

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 3. PROPERTY AND EQUIPMENT: (CONTINUED): Depreciation expense was $0, $700, $64,779, $3,140, and $222,976 for the period from September 22, 1994 (inception) through December 31, 1994, the years ended December 31, 1995 and 1996, and for the six months ended June 30, 1996 and 1997, respectively. NOTE 4. ACCRUED EXPENSES: Accrued expenses consists of the following as of December 31, 1995 and 1996, and June 30, 1997:
DECEMBER 31, --------------------1995 1996 --------- ---------Consulting................................................ Property additions........................................ Professional fees......................................... Payroll taxes and benefits................................ Total................................................. $ 68,155 -18,094 ---------$ 86,249 ----------------$ -877,962 56,039 63,709 ---------$ 997,710 ------------------JUNE 30, 1997 ----------(UNAUDITED) $ 40,304 109,808 101,151 71,463 ----------$ 322,726 ---------------------

NOTE 5. LICENSE ARRANGEMENTS: The proprietary rights and technical information covered by various patent applications have been licensed by the Company from third parties. These licenses will continue for the life of the respective patent or until terminated by either party. The license costs are being amortized over the useful life of the related patents. The agreements call for the payment of royalties over the life of the patents or a shorter life if no patents are issued. NOTE 6. STRATEGIC ALLIANCES: During May 1997, the Company entered into a strategic alliance with Procter & Gamble Pharmaceuticals Inc., a division of Procter & Gamble Company ("Procter & Gamble") for the discovery of drug targets in the field of heart failure. In connection with the agreement, the Company received technology access fees and research and development support of $3 million. Revenue from this initial payment is being recognized ratably over the 18 month initial phase of the agreement of which approximately $167,000 has been recognized as revenue for the six months ended June 30, 1997. Payments by Procter & Gamble to the Company in the form of committed technology access fees and research funding will total a minimum of $10.1 million if the research program continues for its 4 1/2-year term and the Company performs its research obligations under the agreement. Procter & Gamble will be obligated to make additional payments to the Company for the achievement of specified target discovery and related product development and associated regulatory milestones. Proctor & Gamble will also pay the Company royalties on worldwide net sales of all products that may result from the alliance. Procter & Gamble also has the option to expand the alliance to include two additional fields upon terms, including committed research funding, identical to those covering the initial program in heart failure. During September 1997, the Company entered into a strategic alliance with Japan Tobacco Inc. ("Japan Tobacco") for discovery of drug targets and drug leads in the field of renal disease. Payments by Japan Tobacco to the Company in the form of committed technology access fees and research funding total a minimum of $15.0 million if the research program continues for its five year term and the Company performs its research obligations under the agreement. In addition, Japan Tobacco will also make a $3 million investment in common stock of the Company at the time of an initial public offering by the Company, provided that an offering closes within two years of the agreement date. Japan Tobacco will be obligated to make additional payments to the Company for the achievement of specified target discovery and related product development and associated regulatory milestones. Japan Tobacco will also pay the Company royalties on worldwide net sales of all products F-11

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 6. STRATEGIC ALLIANCES: (CONTINUED): that may result from targets discovered pursuant to the alliance. Japan Tobacco also has the option to expand the alliance to include two other fields upon terms, including committed research funding, identical to those covering the initial program in renal disease. The Company's strategy for developing and commercializing pharmaceutical products based on its target discoveries depends on the formation of strategic alliances with pharmaceutical companies. The Company has established two such alliances, both in 1997. There can be no assurance that the Company will be able to establish additional strategic alliances or that any alliances established will be successful. NOTE 7. INCOME TAXES: The actual income tax expense for the period from September 22, 1994 (inception) to December 31, 1994, and the years ended December 31, 1995 and 1996, is different from the amount computed by applying the statutory federal income tax rates to losses before income tax expense. The reconciliation of these differences is as follows:
PERIOD FROM SEPTEMBER 22, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994 -----------------$ (30,737) (4,177) (4,420) 39,334 -------------------YEAR ENDED DECEMBER 31, ---------------------1995 1996 ---------- ---------$ (253,021) $ (977,518) (34,381) 9,799 277,603 ---------$ -------------------(132,827) (49,813) 1,160,158 ---------$ --------------------

Tax benefit at statutory rate................... State income taxes, net of federal income tax effect........................................ Other........................................... Increase in valuation allowance................. Income tax expense..............................

$

The tax effect of cumulative temporary differences at December 31, 1995 and 1996, follow:
1995 ---------316,937 ---------316,937 (316,937) --------$ ----------------------------$ -----------------$ $ 1996 -----------$ 1,128,927 403,889 7,457 -----------1,540,273 (1,477,095) -----------$ 63,178 ----------------------$ 51,380 2,046 9,752 -----------$ 63,178 -----------------------

Deferred Tax Assets: Tax carryforwards.................................................. Start-up costs..................................................... Accrued vacation................................................... Less: Valuation allowance.......................................... Net deferred tax asset........................................... Deferred Tax Liabilities: Depreciation....................................................... Prepaid expenses................................................... Capital leases..................................................... Net deferred tax liabilities.....................................

Net operating loss carryforwards for income tax purposes are approximately $2,779,000, as of December 31, 1996. The Company also has research and development tax credit carryforwards of approximately $56,000 as of December 31, 1996. The carryforwards, if not utilized, will expire in increments through 2011. Utilization of the F-12

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 7. INCOME TAXES: (CONTINUED): net operating losses and credits may be subject to an annual limitation, due to the ownership change limitations provided by the Internal Revenue Code of 1986. NOTE 8. LONG-TERM DEBT: Long-term debt at June 30, 1997, consists of the following:
JUNE 30, 1997 -----------(UNAUDITED) $ 1,046,519 (239,338) -----------$ 807,181 -----------------------

Equipment loan.................................................................. Less--Current portion........................................................... Total long-term debt............................................................

As of June 30, 1997, principal payments on long-term debt for the next five years are as follows:
YEAR ENDING DECEMBER 31, -----------------------------------------1997...................................... 1998...................................... 1999...................................... 2000...................................... 2001......................................

$

116,987 250,312 273,795 299,480 105,945 -----------$ 1,046,519 -----------------------

In March 1997, the Company entered into a loan agreement for the purchase of laboratory and computer equipment. The Company may borrow up to $1.5 million, bearing interest at 9.0%. In April 1997, the Company borrowed $1,084,362 under this agreement. The loan will be repaid in 48 equal monthly installments. The Company has granted the lender a security interest, collateralized by all of the equipment and fixtures acquired under the loan. In conjunction with the agreement, the Company granted warrants to the lender to purchase 30,051 shares of the Company's Series B Convertible Preferred stock at an exercise price of $2.20 per share. NOTE 9. CONVERTIBLE PREFERRED STOCK: Three series of mandatorily redeemable preferred stock have been issued--Series A Convertible Preferred stock ("Series A"), Series A-1 Convertible Preferred stock ("Series A-1") and Series B Convertible Preferred stock ("Series B"). Each holder of common and preferred stock is entitled to one vote for each share held. During 1994, the Company sold 266,666 shares of Series A stock for $400,000. During 1995, the Company sold 66,667 shares of Series A stock for $100,000 and 412,500 shares of Series A-1 stock for $660,000. Warrants to purchase an additional 50,000 shares of Series A-1 stock at an exercise price of $1.60 per share were issued and expires August 2005. During 1996, the Company sold 4,090,909 shares of Series B stock for $9,000,000. The preferred stock is convertible into an equal number of shares of common stock at the option of the holder, with certain additional antidilutive protection provided to the holder. Conversion is mandatory upon the closing of an underwritten public offering that meets certain minimum conditions as to offering price and net proceeds under the Securities Act of 1933. At the option of a majority of the holders of outstanding preferred stock, the Company shall redeem all preferred stock on March 31, 2002, 2003 and 2004, at a rate of 33-1/3%, 50% F-13

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 9. CONVERTIBLE PREFERRED STOCK: (CONTINUED): and 100%, respectively, and at a price of $1.50 per share of Series A, $1.60 per share of Series A-1 and $2.20 per share of Series B, plus any declared, accrued or unpaid dividends of Series A and Series A-1 and any accrued or unpaid dividends of Series B whether declared or undeclared. If funds are insufficient to redeem all outstanding shares, the Company will redeem as many shares as funds are legally available to redeem on a pro-rata basis among all preferred stockholders. The difference between the redemption value of the preferred stock and its carrying value is being accreted through a charge to retained earnings over the period until redemption. With the approval of the holders of 66 2/3% of the outstanding shares of preferred stock, the Company can declare or pay dividends in the amount of $0.120, $0.128 and $0.176 per share of Series A, Series A-1 and Series B preferred stock outstanding, respectively. Upon liquidation, Series A, Series A-1 and Series B stockholders will receive $1.50, $1.60 and $2.20 per share plus any accrued or unpaid dividends, whether or not declared, respectively, prior to any other distributions. During July 1997, the Company sold 4,444,443 shares of Series C Convertible Preferred Stock for net proceeds of approximately $19.1 million. The Company also agreed to issue warrants for an additional 48,889 shares of Series C stock at an exercise price of $4.50. NOTE 10. STOCKHOLDERS' EQUITY: The Company is authorized to issue 6,000,000 shares of common stock and 4,950,000 shares of preferred stock as of June 30, 1997. In October 1996, an officer of the Company resigned. In January 1997, in connection with the resignation, the 55,000 shares of the Company's common stock held by the officer were canceled in satisfaction of the $50,000 note receivable and accrued interest obligation from the officer to the Company (see Note 14). In July 1997, the Company amended and restated its Certificate of Incorporation ("Restated Certificate"), changing the number of shares of common stock and preferred stock authorized for issuance. Under the new Restated Certificate, the Company may issue up to 17,000,000 shares of common stock, 333,333 shares of Series A preferred stock, 462,500 shares of Series A-1 preferred stock, 4,154,167 shares of Series B preferred stock and 4,600,000 shares of Series C preferred stock. NOTE 11. COMMITMENTS AND CONTINGENCIES: OPERATING LEASE Subsequent to year-end, the Company renegotiated its current lease of laboratory and office space under an agreement which expires September 30, 1997, with an option to continue on a month-to-month basis with 60-days written notice to terminate. The Company intends to renew on a month-to-month basis until the relocation to the new facility is complete. During August 1997, the Company entered into an operating lease for new laboratory and office space. The Company is responsible for the design and renovation of an existing facility owned by the lessor. These costs will be funded by the lessor while the responsibility for performance and liability during construction remains with the Company. The lease term is ten years with monthly payments of $89,211 plus 3% annual inflation; however, monthly payments could increase if construction costs exceed a certain amount. The lease also requires the Company to pay for building operating costs. In addition to future minimum lease payments, the Company has issued a warrant to purchase 20,000 shares of common stock at an exercise price of $5.40 per share in connection with the lease. Such warrant will expire upon the completion of the Company's initial public offering (see Note 15). F-14

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 11. COMMITMENTS AND CONTINGENCIES: (CONTINUED): Rent expense for the period from September 22, 1994 (inception) through December 31, 1994, the years ended December 31, 1995 and 1996, and the six months ended June 30, 1996 and 1997, was $0, $0, $238,930, $116,899 and $139,732, respectively. CAPITAL LEASE During 1996, the Company entered into a capital lease to purchase equipment for $471,146. Accumulated amortization for this equipment was $29,447 and $88,340 at December 31, 1996 and June 30, 1997, respectively. Payments during the year ended December 31, 1996 and the six months ended June 30, 1997, totaled $25,252 and $52,039, respectively. Future minimum lease payments are as follows:
YEAR ENDING DECEMBER 31, ---------------------------------------------------------------------------------1997........................................................................ 1998........................................................................ 1999........................................................................ 2000........................................................................ Total minimum lease payments.................................................. Less: Amounts representing imputed interest....................................... Present value of net minimum payments......................................... Less: Current portion............................................................. Noncurrent portion of capital lease obligation....................................

137,104 137,104 137,104 102,827 ---------514,139 (68,245) ---------445,894 (106,195) ---------$ 339,699 -------------------

$

In conjunction with this lease agreement, the Company granted a warrant to the lessor to purchase 13,636 shares of the Company's Series B Convertible Preferred stock at an exercise price of $2.20 per warrant. Such warrant expires five years from the completion of the Company's initial public offering (see Note 15). Clinical trials, manufacturing, marketing and sale of any of the Company's partners' potential therapeutic or diagnostic products may expose the Company to liability claims from the use of such pharmaceutical products. The Company currently does not carry product liability insurance. NOTE 12. 401(K) RETIREMENT PLAN: During 1996, the Company established the Gene Logic Inc. 401(k) Retirement Plan (the "401(k) Plan") for its employees under Section 401(k) of the Internal Revenue Service code. Under this plan, all employees over 21 years of age and with at least six months of service with the Company are eligible to contribute from 2% to 15% of their salary. Employee contributions are 100% vested. The Company is not required to make any contributions to the 401(k) Plan and has not made any contributions through June 30, 1997. NOTE 13. STOCK BASED COMPENSATION: During 1996, the Company instituted a stock plan (the "Plan") whereby the Company's compensation committee (the "Committee"), at its discretion, can grant options, award stock or provide opportunities to make direct purchases of stock to employees, officers, directors and consultants of the company and related corporations. The Plan is authorized to grant options of up to 6,100,000 shares of common stock. Options are to be granted at the fair market value of the common stock at the grant date. The options, awards and opportunities to purchase stock expire at the earlier of termination or the date specified by the Committee at the date of grant, but not more than ten years. F-15

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 13. STOCK BASED COMPENSATION: (CONTINUED): The following is a rollforward of option activity for the year ended December 31, 1996 and the six months ended June 30, 1997:
YEAR ENDED DECEMBER 31, 1996 ---------------------WEIGHTED AVERAGE EXERCISE SHARES PRICE --------- ----------Outstanding, beginning of period.................................... Granted........................................................... Exercised......................................................... Outstanding, end of period.......................................... Exercisable, end of period.......................................... Weighted average fair value of options granted...................... Weighted average remaining contractual life (in years).............. -524,000 (100,000) --------424,000 --------93,844 ----------------$ 0.05 ----------------9.80 ----------------$ -0.12 0.01 0.15 SIX MONTHS ENDED JUNE 30, 1997 ----------------------WEIGHTED AVERAGE EXERCISE SHARES PRICE ---------- ----------(UNAUDITED) 424,000 $ 0.15 890,000 0.15 -----------1,314,000 0.15 ---------242,499 ------------------$ 0.10 ------------------9.45 -------------------

During the six months ended June 30, 1997, the Company granted options with exercise prices below fair value. The Company has recorded deferred compensation of $60,900 at June 30, 1997, and compensation expense of $5,014 for the six months then ended for these options. Also, subsequent to June 30, 1997, the Company granted additional options with exercise prices below fair value. In connection with these grants the Company will record additional deferred compensation of $3,865,250 during the three months ended September 30, 1997 which will be recognized as compensation expense over the four year vesting period of the options. During 1996, an officer of the Company purchased 100,000 shares of common stock for $0.15 per share under the Plan, subject to a declining buy-back right of the Company. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under the Plan, consistent with the method of SFAS No. 123, the Company's net loss and loss per share would have been changed to the pro forma amounts indicated below:
YEAR ENDED DECEMBER 31, -----------------------1995 1996 ---------- -----------$ (744,179) $ (2,875,072) (744,179) (2,883,749) $ (0.50) $ (0.50) (0.60) (0.61)

Net loss: As reported.......................................................................... Pro forma............................................................................ Net loss: As reported.......................................................................... Pro forma............................................................................

F-16

GENE LOGIC INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 13. STOCK BASED COMPENSATION: (CONTINUED): The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, with the following assumptions:
Expected volatility......................................................... Risk-free interest rates.................................................... Expected lives.............................................................. Dividend rate............................................................... 60.0% 5.72% to 5.85% 1-3 years 0%

NOTE 14. RELATED PARTY TRANSACTIONS: During 1996, the Company made loans to two officers of the Company of $50,000 each to offset relocation costs. These notes receivable were secured by common stock previously issued to the officers. In January 1997, one of these notes was cancelled (see Note 10). The remaining note is due in 2002 and bears interest (see Note 15). NOTE 15. CONTEMPLATED INITIAL PUBLIC OFFERING: On October 6, 1997, the Company filed a registration statement with the Securities and Exchange Commission for an initial public offering ("IPO") of 3,000,000 shares of common stock at an anticipated initial offering price of $11 per share. Net proceeds of the offering (not including the concurrent Japan Tobacco investment previously described), after underwriting commissions and expenses are expected to be approximately $30,090,000 ($37,693,500 if the Underwriters' over-allotment option is exercised). Concurrent with the IPO, a note receivable of $50,000 plus interest, from an officer of the Company will be forgiven, the vesting of certain options will be accelerated and the authorized capital stock of the Company will be increased to 60,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. The Company intends to use the proceeds for working capital to support research and development, capital expenditures and general corporate purposes. F-17

DRUG TARGET DISCOVERY "MOLECULAR MOVIE" [graphical depiction of series of Molecular Topography snapshots] 10,000 GENES DIFFERENTIALLY EXPRESSED, DISEASE-ASSOCIATED GENES [graphical depiction of differential expression of disease-associated genes] 50-500 GENES PRIORITIZATION OF POTENTIAL DRUG TARGETS [numbers and letters representing gene sequences] 5-50 GENES The drug target discovery process comprises the following steps: 1. The Company compares normal and diseased tissues through a series of Molecular Topography snapshots, a "molecular movie," to identify the changes in gene expression that occur as the disease develops and progresses. 2. Using its bioinformatics tools, Gene Logic analyzes these changes to identify which expressed genes are associated with the disease. 3. Gene Logic prioritizes disease-associated genes as drug targets using its bioinformatics system. This prioritization depends upon a number of factors including: (i) a gene's temporal association with the disease process; (ii) the tissue distribution of its expression; (iii) any homology it may have with known target classes, such as membrane receptors, enzymes or ion channels; (iv) its involvement in known metabolic or signal transduction pathways; and (v) the feasibility of developing a screening assay.

[LOGO]

PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth all expenses payable by the Registrant in connection with the sale of the Common Stock being registered. All the amounts shown are estimates except for the SEC registration fee and the NASD filing fee.
Registration fee.................................................................. NASD filing fee................................................................... Nasdaq Stock Market Listing Application fee....................................... Blue sky qualification fees and expenses.......................................... Printing and engraving expenses................................................... Legal fees and expenses........................................................... Accounting fees and expenses...................................................... Transfer agent and registrar fees................................................. Miscellaneous..................................................................... Total......................................................................... $ 12,546 4,640 * * * * * * * --------$ 600,000 -----------------

* To be provided by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under Section 145 of the Delaware General Corporation Law, the Registrant has broad powers to indemnify its Directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act. The Registrant's Restated Certificate of Incorporation and Amended and Restated By-laws include provisions to (i) eliminate the personal liability of its directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware Law") and (ii) require the Registrant to indemnify its Directors and officers to the fullest extent permitted by Section 145 of the Delaware Law, including circumstances in which indemnification is otherwise discretionary. Pursuant to Section 145 of the Delaware Law, a corporation generally has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are or are threatened to be made a party by reason of their serving in such positions so long as they acted in good faith and in a manner they reasonably believed to be in or not opposed to, the best interests of the corporation and with respect to any criminal action, they had no reasonable cause to believe their conduct was unlawful. The Registrant believes that these provisions are necessary to attract and retain qualified persons as Directors and officers. These provisions do not eliminate the Directors' duty of care, and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware Law. In addition, each Director will continue to be subject to liability for breach of the Director's duty of loyalty to the Registrant, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for acts or omissions that the Director believes to be contrary to the best interests of the Registrant or its stockholders, for any transaction from which the Director derived an improper personal benefit, for acts or omissions involving a reckless disregard for the Director's duty to the Registrant or its stockholders when the Director was aware or should have been aware of a risk of serious injury to the Registrant or its stockholders, for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the Director's duty to the Registrant or its stockholders, for improper transactions between the Director and the Registrant and for improper II-1

distributions to stockholders and loans to Directors and officers. The provision also does not affect a Director's responsibilities under any other law, such as the federal securities law or state or federal environmental laws. The Registrant has entered into indemnity agreements with each of its Directors and executive officers that require the Registrant to indemnify such persons against expenses, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that such person is or was a Director or an executive officer of the Registrant or any of its affiliated enterprises, provided that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. At present, there is no pending litigation or proceeding involving a Director, officer or key employee of the Registrant as to which indemnification is being sought nor is the Registrant aware of any threatened litigation that may result in claims for indemnification by any officer or Director. The Registrant has an insurance policy covering the officers and Directors of the Registrant with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Since September 22, 1994 (inception), the Registrant has sold and issued the following unregistered securities: 1. During the period, the Registrant granted incentive stock options to employees, officers and directors of the Registrant under its 1996 Stock Plan (the "Stock Plan") covering an aggregate of 2,538,654 shares of the Registrant's Common Stock. Certain of these options vest over a period of time following their respective date of grant. 2. During the period, the Registrant granted non-statutory stock options to employees, officers and directors of the Registrant under the Stock Plan covering an aggregate of 239,227 shares of the Registrant's Common Stock. Certain of these options vest over a period of time following their respective date of grant. 3. During the period, the Registrant issued 642,733 shares of its Common Stock to employees and consultants for $16,700 in cash and $3,227 in services. An additional 240,732 shares were issued pursuant to the exercise of incentive stock options granted under the Stock Plan. 4. In November 1994 and May 1995, pursuant to the terms of an equity financing of the Registrant, the Registrant issued 333,333 shares of Series A Preferred Stock for $500,000 to certain investors. 5. In September 1995, pursuant to the terms of an equity financing of the Registrant, the Registrant issued 412,500 shares of Series A-1 Preferred Stock for $660,000 to certain investors. In connection with such financing, the Registrant issued warrants to purchase 50,000 shares of Series A-1 Preferred Stock at an exercise price of $1.60 per share to certain of such investors. 6. In April through October 1996, pursuant to the terms of an equity financing of the Registrant, the Registrant issued 4,090,909 shares of Series B Preferred Stock for $9,000,000 to certain investors. 7. In April 1997, the Registrant issued a warrant to purchase 25,758 shares of Series B Preferred Stock at an exercise price of $2.20 per share in connection with an equipment loan agreement. II-2

8. In April 1997, the Registrant issued a warrant to purchase 13,636 shares of Series B Preferred Stock at an exercise price of $2.20 per share in connection with the establishment of a capital lease facility. 9. In July 1997, pursuant to the terms of an equity financing of the Registrant, the Registrant issued 4,444,443 shares of Series C Preferred Stock for $19,999,993.50 to certain investors. 10. In August 1997, in connection with the Registrant's facilities lease, the Registrant issued a warrant to purchase 20,000 shares of the Registrant's Common Stock at an exercise price of $5.40 per share. 11. In September 1997, the Registrant issued 50,000 shares of its Common Stock to Genaissance Pharmaceuticals, Inc. in connection with a negotiated settlement. 12. The Registrant issued a warrant to purchase 48,889 shares of its Common Stock at an exercise price of $4.50 per share to Hambrecht & Quist LLC for services as placement agent for Registrant's Series C Preferred Stock financing, which closed on July 15, 1997. 13. In September 1997, the Registrant issued a warrant to purchase 4,293 shares of Series B Preferred Stock at an exercise price of $2.20 per share in connection with an equipment loan agreement. The sales and issuances of securities in the transactions described in paragraphs (1), (2) and (3) above were deemed to be exempt from registration under the Securities Act by virtue of Rule 701 promulgated thereunder in that they were offered and sold either pursuant to written compensatory benefit plans or pursuant to a written contract relating to compensation, as provided by Rule 701. With respect to the grant of stock options described in paragraphs (1) and (2) above exemption from registration under the Securities Act was unnecessary in that none of such transactions involved a "sale" of securities as such term is used in Section 2(3) of the Securities Act. The sales and issuances of securities in the transactions described in paragraphs (4) through (13) above were deemed to be exempt from registration under the Securities Act by virtue of Section 4(2) and/ or Regulation D promulgated thereunder. The recipients represented their intention to acquire the securities for investment purposes only and not with a view to the distribution thereof. Appropriate legends are affixed to the stock certificates issued in such transactions. Similar legends were imposed in connection with any subsequent sales of any such securities. All recipients either received adequate information about the Registrant of had access, though employment or other relationships, to such information. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (A) EXHIBITS.
EXHIBIT NUMBER ---------1.1 3.1 3.2 3.3* 3.4 4.1 DESCRIPTION OF DOCUMENT -------------------------------------------------------------------------------------------------------Form of Underwriting Agreement. Restated Certificate of Incorporation. Amended and Restated Certificate of Incorporation, to be filed and become effective immediately following this offering. By-laws, as amended. By-laws, as amended and restated, to become effective immediately following this offering. References made to Exhibits 3.1, 3.2 and 3.3.

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EXHIBIT NUMBER ---------4.2* 5.1* 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21* 10.22 10.23*

DESCRIPTION OF DOCUMENT -------------------------------------------------------------------------------------------------------Specimen Stock Certificate. Opinion of Cooley Godward LLP. Form of Indemnity Agreement entered into between Registrant and its directors and executive officers. Registrant's 1997 Equity Incentive Plan (the "Stock Plan"). Form of Stock Option Agreement under the Stock Plan. Form of Stock Option Grant Notice. Registrant's Employee Stock Purchase Plan and related offering document. Registrant's Non-Employee Directors' Stock Option Plan. Form of Nonstatutory Stock Option under the Non-Employee Directors' Stock Option Plan. Stock Restriction Agreement, dated July 31, 1996, between the Registrant and Mark D. Gessler. Stock Restriction Agreement, dated December 20, 1996, between the Registrant and Mark D. Gessler. Stock Restriction Agreement, dated February 29, 1996, between the Registrant and Michael J. Brennan. Amended and Restated Investor Rights Agreement, dated July 15, 1997, between the Registrant and certain investors. Employment Agreement, dated October 31, 1995, between the Registrant and Michael J. Brennan. Amendment to Employment Agreement, dated July 9, 1997, between the Registrant and Michael J. Brennan. Employment Agreement, dated May 16, 1996, between the Registrant and Mark D. Gessler. Amendment to Employment Agreement, dated July 9, 1997, between the Registrant and Mark D. Gessler. Series A-1 Convertible Preferred Stock Purchase Warrant, dated August 1, 1995, issued to Oxford Bioscience Partners L.P. Series A-1 Convertible Preferred Stock Purchase Warrant, dated August 1, 1995, issued to Oxford Bioscience Partners (Bermuda) Limited Partnership. Warrant for the purchase of shares of Common Stock, dated August 29, 1997, between Registrant and ARE-708 Quince Orchard, LLC. Warrant, dated April 24, 1997, issued to Venture Lending & Leasing, Inc. Warrant issued to Hambrecht & Quist LLC. Lease Agreement, dated May 7, 1997, between Registrant and M.O.R. XVIII Associates Limited Partnership. Lease Agreement, dated August 22, 1997, between Registrant and ARE-708 Quince Orchard, LLC. Lease Agreement, dated March 18, 1996, between Registrant and Comdisco, Inc.

II-4

EXHIBIT NUMBER ---------10.24+ 10.25+ 10.26+ 10.27 10.28+ 10.29+ 10.30+ 10.31+ 11.1 23.1 23.2 24.1 27.1

DESCRIPTION OF DOCUMENT -------------------------------------------------------------------------------------------------------Target Discovery Collaboration and License Agreement, dated May 27, 1997, between Registrant and Procter & Gamble Pharmaceuticals, Inc. ("Procter & Gamble"). Promissory Note, dated May 27, 1997, between Registrant and Procter & Gamble. Drug Target and Drug Lead Discovery Collaboration Agreement, dated September 9, 1997, between Registrant and Japan Tobacco Inc. Share Purchase Agreement, dated September 9, 1997, between Registrant and Japan Tobacco Inc. License Agreement, dated May 22, 1996, between Registrant and Yale University. Amendment, dated October 1, 1997, to the License Agreement between Registrant and Yale University. Sole Commercial Patent License Agreement, dated June 15, 1997, between Registrant and Lockheed Martin Energy Research Company. License Agreement, dated May 30, 1997, between Registrant and Dr. Kenneth L. Beattie. Statement Re Computation of Per Share Earnings. Consent of Arthur Andersen LLP. Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1. Power of Attorney. Reference is made to page II-6. Financial Data Schedule

* To be filed by amendment. + Confidential Treatment has been requested with respect to certain portions of this exhibit. Omitted portions will be filed separately with the Securities and Exchange Commission. (B) SCHEDULES All schedules are omitted because they are not required, are not applicable or the information is included in the financial statements or notes thereto. ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to provisions described in Item 15 or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5

The undersigned Registrant hereby undertakes: (1) That, for purposes of determining any liability under the Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) That, for purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (3) For the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-6

SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbia, County of Columbia, State of Maryland, on the 6th day of October, 1997.
By: /s/ MICHAEL J. BRENNAN -----------------------------------------Michael J. Brennan, M.D., Ph.D. PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR

POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Brennan and Mark D. Gessler, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE -----------------------------------------------------/s/ MICHAEL J. BRENNAN ------------------------------------------Michael J. Brennan, M.D., Ph.D. /s/ MARK D. GESSLER ------------------------------------------Mark D. Gessler /s/ ALAN G. WALTON ------------------------------------------Alan G. Walton, Ph.D., D.Sc. /s/ JULES BLAKE ------------------------------------------Jules Blake, Ph.D. /s/ CHARLES L. DIMMLER III ------------------------------------------Charles L. Dimmler III /s/ G. ANTHONY GORRY ------------------------------------------G. Anthony Gorry, Ph.D. /s/ JEFFREY D. SOLLENDER ------------------------------------------Jeffrey D. Sollender TITLE --------------------------------President, Chief Executive Officer and Director (PRINCIPAL EXECUTIVE OFFICER) Senior Vice President, Corporate Development and Chief Financial Officer (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) Chairman of the Board of Directors Director DATE ---------------------October 6, 1997

October 6, 1997

October 6, 1997

October 6, 1997

Director

October 6, 1997

Director

October 6, 1997

Director

October 6, 1997

II-7

Exhibit 1.1 DRAFT DATED 10/7/97 3,000,000 Shares (1) GENE LOGIC INC. Common Stock UNDERWRITING AGREEMENT ______________, 1997 BANCAMERICA ROBERTSON STEPHENS HAMBRECHT & QUIST LLC UBS SECURITIES LLC As Representatives of the several Underwriters c/o BancAmerica Robertson Stephens 555 California Street Suite 2600 San Francisco, California 94104 Ladies/Gentlemen: GENE LOGIC INC., a Delaware corporation (the "Company"), addresses you as the Representatives of each of the persons, firms and corporations listed in Schedule A hereto (herein collectively called the "Underwriters") and hereby confirms its agreement with the several Underwriters as follows: 1. Description of Shares. The Company proposes to issue and sell 3,000,000 shares of its authorized and unissued Common Stock, $.01 par value per share (the "Firm Shares"), to the several Underwriters. The Company also proposes to grant to the Underwriters an option to purchase up to 450,000 additional shares of the Company's Common Stock, $.01 par value per share (the "Option Shares"), as provided in Section 7 hereof. As used in this Agreement, the term "Shares" shall include the Firm Shares and the Option Shares. All shares of Common Stock, $.01 par value per share, of the Company to be outstanding after giving effect to the sales contemplated hereby, including the Shares, are hereinafter referred to as "Common Stock." 2. Representations, Warranties and Agreements of the Company. The Company represents and warrants to and agrees with each Underwriter that:

(1) Plus an option to purchase up to 450,000 additional shares from the Company to cover over-allotments.

(a) A registration statement on Form S-1 (File No. 333-_______) with respect to the Shares, including a prospectus subject to completion, has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the applicable rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") under the Act and has been filed with the Commission; such amendments to such registration statement, such amended prospectuses subject to completion and such abbreviated registration statements pursuant to Rule 462(b) of the Rules and Regulations as may have been required prior to the date hereof have been similarly prepared and filed with the Commission; and the Company will file such additional amendments to such registration statement, such amended prospectuses subject to completion and such abbreviated registration statements as may hereafter be required. Copies of such registration statement and amendments, of each related prospectus subject to completion (the "Preliminary Prospectuses") and of any abbreviated registration statement pursuant to Rule 462(b) of the Rules and Regulations have been delivered to you or your counsel and, to the extent applicable, were identical to the electronically transmitted copies thereof filed with the Commission pursuant to the Commission's Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"), except to the extent permitted by Regulation S-T. If the registration statement relating to the Shares has been declared effective under the Act by the Commission, the Company will prepare and promptly file with the Commission the information omitted from the registration statement pursuant to Rule 430A(a) or, if BancAmerica Robertson Stephens, on behalf of the several Underwriters, shall agree to the utilization of Rule 434 of the Rules and Regulations, the information required to be included in any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules and Regulations or as part of a post-effective amendment to the registration statement (including a final form of prospectus). If the registration statement relating to the Shares has not been declared effective under the Act by the Commission, the Company will prepare and promptly file an amendment to the registration statement, including a final form of prospectus, or, if BancAmerica Robertson Stephens, on behalf of the several Underwriters, shall agree to the utilization of Rule 434 of the Rules and Regulations, the information required to be included in any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations. The term "Registration Statement" as used in this Agreement shall mean such registration statement, including financial statements, schedules and exhibits, in the form in which it became or becomes, as the case may be, effective (including, if the Company omitted information from the registration statement pursuant to Rule 430A(a) or files a term sheet pursuant to Rule 434 of the Rules and Regulations, the information deemed to be a part of the registration statement at the time it became effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and Regulations) and, in the event of any amendment thereto or the filing of any abbreviated registration statement pursuant to Rule 462(b) of the Rules and Regulations relating thereto after the effective date of such registration statement, shall also mean (from and after the effectiveness of such amendment or the filing of such abbreviated registration statement) such registration statement as so amended, together with any such abbreviated registration statement. The term "Prospectus" as used in this Agreement shall mean the prospectus relating to the Shares as included in such Registration Statement at the time it 2

becomes effective (including, if the Company omitted information from the Registration Statement pursuant to Rule 430A(a) of the Rules and Regulations, the information deemed to be a part of the Registration Statement at the time it became effective pursuant to Rule 430A(b) of the Rules and Regulations); provided, however, that if in reliance on Rule 434 of the Rules and Regulations and with the consent of BancAmerica Robertson Stephens, on behalf of the several Underwriters, the Company shall have provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time that a confirmation is sent or given for purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus subject to completion" (as defined in Rule 434(g) of the Rules and Regulations) last provided to the Underwriters by the Company and circulated by the Underwriters to all prospective purchasers of the Shares (including the information deemed to be a part of the Registration Statement at the time it became effective pursuant to Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing, if any revised prospectus shall be provided to the Underwriters by the Company for use in connection with the offering of the Shares that differs from the prospectus referred to in the immediately preceding sentence (whether or not such revised prospectus is required to be filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations), the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Underwriters for such use. If in reliance on Rule 434 of the Rules and Regulations and with the consent of BancAmerica Robertson Stephens, on behalf of the several Underwriters, the Company shall have provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time that a confirmation is sent or given for purposes of Section 2(10)(a) of the Act, the Prospectus and the term sheet, together, will not be materially different from the prospectus in the Registration Statement. For purposes of this Agreement, all references to the Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement to any of the foregoing shall be deemed to include the respective copies thereof filed with the Commission pursuant to EDGAR. (b) The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus or instituted proceedings for that purpose, and each such Preliminary Prospectus has conformed in all material respects to the requirements of the Act and the Rules and Regulations and, as of its date, has not included any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and at the time the Registration Statement became or becomes, as the case may be, effective and at all times subsequent thereto up to and on the Closing Date (hereinafter defined) and on any later date on which Option Shares are to be purchased, (i) the Registration Statement and the Prospectus, and any amendments or supplements thereto, contained and will contain all material information required to be included therein by the Act and the Rules and Regulations and will in all material respects conform to the requirements of the Act and the Rules and Regulations, (ii) the Registration Statement, and any amendments or supplements thereto, did not and will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (iii) the Prospectus, and any amendments or supplements thereto, did not and will not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under 3

which they were made, not misleading; provided, however, that none of the representations and warranties contained in this subparagraph (b) shall apply to information contained in or omitted from the Registration Statement or Prospectus, or any amendment or supplement thereto, in reliance upon, and in conformity with, written information relating to any Underwriter furnished to the Company by such Underwriter specifically for use in the preparation thereof. (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation with full power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Prospectus; the Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; the Company is in possession of and operating in compliance with all authorizations, licenses, approvals, certificates, consents, orders and permits from state, federal and other regulatory authorities including, without limitation, the United States Food and Drug Administration (the "FDA"), the Drug Enforcement Agency (the "DEA") and the United States Environment Protection Agency (the "EPA"), which are material to the conduct of its business, all of which are valid and in full force and effect; there are no FDA, DEA or EPA enforcement actions pending or, to the best knowledge of the Company, threatened against the Company; the Company is not in violation of its charter or bylaws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company is a party or by which it or its properties may be bound; and the Company is not in material violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over itsproperties of which it has knowledge. The Company does not own or control, directly or indirectly, any corporation, 4

association or other entity. (d) The Company has full legal right, power and authority to enter into this Agreement and perform the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement on the part of the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles; the performance of this Agreement and the consummation of the transactions herein contemplated will not result in a material breach or violation of any of the terms and provisions of, or constitute a default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company is a party or by which it or any of its properties may be bound, (ii) the charter or bylaws of the Company, or (iii) any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties. No consent, approval, authorization or order of or qualification with any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties is required for the execution and delivery of this Agreement and the consummation by the Company of the transactions herein contemplated, except such as may be required under the Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") (if applicable), under state or other securities or Blue Sky laws, or under the rules and regulations of the National Association of Securities Dealers, Inc. (the "NASD"), all of which requirements have been satisfied in all material respects. (e) There is not any pending or, to the best of the Company's knowledge, threatened action, suit, claim or proceeding against the Company or any of its officers or any of its properties, assets or rights before any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its officers or properties or otherwise which (i) might result in any material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company or might materially and adversely affect its properties, assets or rights, (ii) might prevent consummation of the transactions contemplated hereby or (iii) is required to be disclosed in the Registration Statement or Prospectus and is not so disclosed; and there are no agreements, contracts, leases or documents of the Company of a character required to be described or referred to in the Registration Statement or Prospectus or to be filed as an exhibit to the Registration Statement by the Act or the Rules and Regulations which have not been accurately described in all material respects in the Registration Statement or Prospectus or filed as exhibits to the Registration Statement. 5

(f) All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and the authorized and outstanding capital stock of the Company is as set forth in the Prospectus under the caption "Capitalization" and conforms in all material respects to the statements relating thereto contained in the Registration Statement and the Prospectus (and such statements correctly state the substance of the instruments defining the capitalization of the Company); the Firm Shares and the Option Shares have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company against payment therefor in accordance with the terms of this Agreement, will be duly and validly issued and fully paid and nonassessable, and will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest; and no preemptive right, co-sale right, registration right, right of first refusal or other similar right of stockholders exists with respect to any of the Firm Shares or Option Shares or the issuance and sale thereof other than those that have been expressly waived prior to the date hereof and those that will automatically expire upon and/or will not apply to the consummation of the transactions contemplated on the Closing Date. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale or transfer of the Shares except as may be required under the Act or under state or other securities or Blue Sky laws or pursuant to the rules and regulations of the NASD. Except as disclosed in or contemplated by the Prospectus and the financial statements of the Company, and the related notes thereto, included in the Prospectus, there are no outstanding options to purchase, or preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of the capital stock of the Company or any such options, rights, convertible securities or obligations. The description of the Company's stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted and exercised thereunder, set forth in the Prospectus accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights. (g) Arthur Andersen LLP, which has examined the consolidated financial statements of the Company, together with the related schedules and notes, as of December 31, 1995 and 1996 and for the period from September 22, 1994 (inception) through December 31, 1994 and the years ended December 31, 1995 and 1996 filed with the Commission as a part of the Registration Statement, which are included in the Prospectus, are independent accountants within the meaning of the Act and the Rules and Regulations; the audited consolidated financial statements of the Company, together with the related schedules and notes, and the unaudited consolidated financial information, forming part of the Registration Statement and Prospectus, fairly present the financial position and the results of operations of the Company at the respective dates and for the respective periods to which they 6

apply; and all audited consolidated financial statements of the Company, together with the related schedules and notes, and the unaudited consolidated financial information, filed with the Commission as part of the Registration Statement, have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved except as may be otherwise stated therein. The selected and summary financial and statistical data included in the Registration Statement present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein. No other financial statements or schedules are required to be included in the Registration Statement. (h) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been (i) any material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company, (ii) any transaction that is material to the Company, except transactions entered into in the ordinary course of business, (iii) any obligation, direct or contingent, that is material to the Company, incurred by the Company, except obligations incurred in the ordinary course of business, (iv) any change in the capital stock or outstanding indebtedness of the Company that is material to the Company, (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company, or (vi) any loss or damage (whether or not insured) to the property of the Company which has been sustained or will have been sustained which has a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company. (i) Except as set forth in the Registration Statement and Prospectus, (i) the Company has good and marketable title to all properties and assets described in the Registration Statement and Prospectus as owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest, other than such as would not have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company, (ii) the agreements to which the Company is a party described in the Registration Statement and Prospectus are valid agreements, enforceable by the Company, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles and, to the best of the Company's knowledge, the other contracting party or parties thereto are not in material breach or material default under any of such agreements, and (iii) the Company has valid and enforceable leases for all properties described in the Registration Statement and Prospectus as leased by it, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. Except as set forth in the Registration Statement and Prospectus, the Company owns or leases all such properties as are necessary to its operations as now conducted or as proposed to be conducted. 7

(j) The Company has timely filed all necessary federal, state and foreign income and franchise tax returns and has paid all taxes shown thereon as due, and there is no tax deficiency that has been or, to the best of the Company's knowledge, might be asserted against the Company that might have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company; and all tax liabilities are adequately provided for on the books of the Company. (k) The Company maintains insurance with insurers of recognized financial responsibility of the types and in the amounts generally deemed adequate for its business and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all of which insurance is in full force and effect; the Company has not been refused any insurance coverage sought or applied for; and the Company does not have any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition (financial or otherwise), earnings, operations, business or business prospects of the Company. (l) To the best of Company's knowledge, no labor disturbance by the employees of the Company exists or is imminent; and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, subassemblers, value added resellers, subcontractors, original equipment manufacturers, authorized dealers or international distributors that might be expected to result in a material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company. No collective bargaining agreement exists with any of the Company's employees and, to the best of the Company's knowledge, no such agreement is imminent. (m) The Company owns or possesses adequate rights to use all patents, patent rights, patent applications, inventions, trade secrets, know-how, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights or other information (collectively, "Intellectual Property") which are necessary to conduct its businesses as now, or as proposed to be, conducted by it as described in the Registration Statement and Prospectus; the expiration of any Intellectual Property would not have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company; the Company has not received any notice of, and has no knowledge of, any infringement of or conflict with asserted rights of the Company by others with respect to any Intellectual Property (except as disclosed in the Prospectus); the Company has not received any notice of, and has no knowledge of, any infringement of or conflict with asserted rights of others with respect to any Intellectual Property which, singly or in the aggregate, if the subject of an unfavorable decision, 8

ruling or finding, might have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company; and to the knowledge of the Company, none of the patents owned or licensed by the Company are unenforceable or invalid. The Company has duly and properly filed or caused to be filed with the United States Patent and Trademark Office (the "PTO") and applicable foreign and international patent authorities all patent applications described or referred to in the Prospectus, and believes it has complied with the PTO's duty of candor and disclosure for each of the United States patent and patent applications described or referred to in the Prospectus; to the best of the Company's knowledge, all assignments from each named inventor to the Company or Licensor (as defined below), as the case may be, have been executed and recorded with the PTO for each patent and patent application; the Company is unaware of any facts which would preclude the grant of a patent from each of the patent applications described or referred to in the Prospectus; the Company has no knowledge of any facts which would preclude it from having clear title to its patents and patent applications referenced in the Prospectus; and the Company has not terminated or breached any material agreement covering its Intellectual Property rights, except where such breach would not have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company. The Company is not aware of the granting of any patents to third parties or the filing of patent applications by third parties or any other rights of third parties to any of the Company's Intellectual Property. The Company is not aware of any pending U.S. or foreign patent applications which, if issued, would limit materially or prohibit the business now conducted or proposed to be conducted by the Company as described in the Registration Statement and the Prospectus (except as described therein). (n) The Common Stock has been approved for quotation on The Nasdaq National Market, subject to official notice of issuance. (o) The Company has been advised concerning the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder, and has in the past conducted, and intends in the future to conduct, its affairs in such a manner as to ensure that it will not become an "investment company" or a company "controlled" by an "investment company" within the meaning of the 1940 Act and such rules and regulations. (p) The Company has not distributed and will not distribute prior to the later of (i) the Closing Date, or any date on which Option Shares are to be purchased, as the case may be, and (ii) completion of the distribution of the Shares, any offering material in connection with the offering and sale of the Shares other than any Preliminary Prospectuses, the Prospectus, the Registration Statement and other materials, if any, permitted by the Act. (q) The Company has not at any time during the last five (5) years (i) made any unlawful contribution to any candidate for foreign office or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public 9

or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof. (r) The Company has not taken and will not take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares. (s) (i) Each of the individuals listed in Exhibit 2(s) hereto, including each officer and director of the Company and each beneficial owner of greater than 1% of the outstanding shares of capital stock of the Company, and certain additional securityholders of the Company, has agreed in writing that such person will not, directly or indirectly, without the prior written consent of BancAmerica Robertson Stephens, sell, offer, contract to sell, pledge, grant any option to purchase or otherwise dispose of (collectively, a "Disposition") any shares of Common Stock, any options or warrants to purchase any shares of Common Stock, or any securities convertible into or exchangeable for, or any other rights to purchase or acquire, Common Stock (collectively, "Securities") held by such person, acquired by such person after the date of the lock-up letter agreement (the "Lock-Up Agreement") or which may be deemed to be beneficially owned by such person pursuant to the Rules and Regulations promulgated under the Act, for a period commencing on the date of the execution of the Lock-Up Agreement and ending 180 days after the date the Registration Statement is declared effective by the Commission (the "Lock-Up Period"). The foregoing restriction has been expressly agreed to preclude the holder of Securities from engaging in any hedging or other transaction which is designed to or reasonably expected to lead to or result in a Disposition of Securities during the Lock-Up Period, even if such Securities would be disposed of by someone other than such holder. Such prohibited hedging or other transactions would include, without limitation, any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any Securities or with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from Securities. Notwithstanding the foregoing, such person may transfer any or all of the Securities (i) as a bona fide gift or gifts (including, but not limited to, a transfer without consideration to any trust for the benefit of any member of the immediate family of such person or to any partnership or other entity all of whose beneficial ownership is held by such person or members of his or her immediate family) or (ii) as a distribution to limited partners or shareholders of such person; provided, however, that in any case it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding the Securities subject to the foregoing restrictions. Such person has also agreed to notify BancAmerica Robertson Stephens in writing prior to any transfer of Securities. Furthermore, such person has also agreed and consented to the entry of stop transfer instructions with the Company's transfer agent against the transfer of the Securities held by such person except in compliance with this restriction. The Company has provided to counsel for the Underwriters a complete and accurate list of all securityholders of the Company and the number and type of securities held by each securityholder. The Company has provided to counsel for the Underwriters true, accurate and complete copies of all of the Lock-Up Agreements presently in effect or effected hereby. 10

The Company hereby represents and warrants that it will not release any of its officers, directors or shareholders from any Lock-Up Agreements currently existing or hereafter effected without the prior written consent of BancAmerica Robertson Stephens. (ii) Each holder of an option or warrant to purchase Common Stock is either subject to a Lock-Up Agreement, or is required to execute a Lock-Up Agreement before receiving any shares of Common Stock from the Company during the Lock-Up Period. The Company hereby represents and warrants that during the Lock-Up Period, it will obtain an executed Lock-Up Agreement from each person who wishes to exercise an option or warrant to purchase Common Stock prior to the issuance of such Common Stock. (t) Except as set forth in the Registration Statement and Prospectus, (i) the Company is in compliance with all rules, laws and regulations relating to the use, treatment, storage and disposal of toxic substances and protection of health or the environment ("Environmental Laws") which are applicable to its business, except where the failure to be in compliance would not have a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company, (ii) the Company has received no notice from any governmental authority or third party of an asserted claim under Environmental Laws, which claim is required to be disclosed in the Registration Statement and the Prospectus, (iii) the Company will not be required to make future material capital expenditures to comply with Environmental Laws and (iv) no property which is owned, leased or occupied by the Company has been designated as a Superfund site pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq), or otherwise designated as a contaminated site under applicable state or local law. (u) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (v) There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company to or for the benefit of any of the officers or directors of the Company or any of the members of the families of any of them, except as disclosed in the Registration Statement and the Prospectus. 3. Purchase, Sale and Delivery of Shares. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at a purchase price of $_____ per share, the 11

respective number of Firm Shares as hereinafter set forth. The obligation of each Underwriter to the Company shall be to purchase from the Company that number of Firm Shares which is set forth opposite the name of such Underwriter in Schedule A hereto (subject to adjustment as provided in Section 10). Delivery of definitive certificates for the Firm Shares to be purchased by the Underwriters pursuant to this Section 3 shall be made against payment of the purchase price therefor by the several Underwriters by certified or official bank check or checks drawn in next-day funds, payable to the order of the Company (and the Company agrees not to deposit any such check in the bank on which it is drawn, and not to take any other action with the purpose or effect of receiving immediately available funds, until the business day following the date of its delivery to the Company, and, in the event of any breach of the foregoing, the Company shall reimburse the Underwriters for the interest lost and any other expenses borne by them by reason of such breach), at the offices of Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San Diego, CA 92121-2128 (or at such other place as may be agreed upon among the Representatives and the Company), at 7:00 A.M., San Francisco time (a) on the third (3rd) full business day following the first day that Shares are traded, (b) if this Agreement is executed and delivered after 1:30 P.M., San Francisco time, the fourth (4th) full business day following the day that this Agreement is executed and delivered or (c) at such other time and date not later than seven (7) full business days following the first day that Shares are traded as the Representatives and the Company may determine (or at such time and date to which payment and delivery shall have been postponed pursuant to Section 10 hereof), such time and date of payment and delivery being herein called the "Closing Date" provided, however, that if the Company has not made available to the Representatives copies of the Prospectus within the time provided in Section 4(d) hereof, the Representatives may, in their sole discretion, postpone the Closing Date until no later than two (2) full business days following delivery of copies of the Prospectus to the Representatives. The certificates for the Firm Shares to be so delivered will be made available to you at such office or such other location including, without limitation, in New York City, as you may reasonably request for checking at least one (1) full business day prior to the Closing Date and will be in such names and denominations as you may request, such request to be made at least two (2) full business days prior to the Closing Date. If the Representatives so elect, delivery of the Firm Shares may be made by credit through full fast transfer to the accounts at The Depository Trust Company designated by the Representatives. It is understood that you, individually, and not as the Representatives of the several Underwriters, may (but shall not be obligated to) make payment of the purchase price on behalf of any Underwriter or Underwriters whose check or checks shall not have been received by you prior to the Closing Date for the Firm Shares to be purchased by such Underwriter or Underwriters. Any such payment by you shall not relieve any such Underwriter or Underwriters of any of its or their obligations hereunder. After the Registration Statement becomes effective, the several Underwriters intend to make an initial public offering (as such term is described in Section 11 hereof) of the Firm Shares at an initial public offering price of $____ per share. After the initial public offering, the several Underwriters may, in their discretion, vary the initial public offering price. 12

The information set forth in the last paragraph on the front cover page (insofar as such information relates to the Underwriters), on the inside front cover page of the Prospectus concerning stabilization and over-allotment by the Underwriters, and under the second, seventh and ninth paragraphs under the caption "Underwriting" in any Preliminary Prospectus and in the Final Prospectus constitutes the only information furnished by the Underwriters to the Company for inclusion in any Preliminary Prospectus, the Prospectus or the Registration Statement, and you, on behalf of the respective Underwriters, represent and warrant to the Company that the statements made therein do not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4. Further Agreements of the Company. The Company agrees with the several Underwriters that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective as promptly as possible; the Company will use its best efforts to cause any abbreviated registration statement pursuant to Rule 462(b) of the Rules and Regulations as may be required subsequent to the date the Registration Statement is declared effective to become effective as promptly as possible; the Company will notify you, promptly after it shall receive notice thereof, of the time when the Registration Statement, any subsequent amendment to the Registration Statement or any abbreviated registration statement has become effective or any supplement to the Prospectus has been filed; if the Company omitted information from the Registration Statement at the time it was originally declared effective in reliance upon Rule 430A(a) of the Rules and Regulations, the Company will provide evidence satisfactory to you that the Prospectus contains such information and has been filed, within the time period prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part of a post-effective amendment to such Registration Statement as originally declared effective which is declared effective by the Commission; if the Company files a term sheet pursuant to Rule 434 of the Rules and Regulations, the Company will provide evidence satisfactory to you that the Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as applicable, of the Rules and Regulations, have been filed, within the time period prescribed, with the Commission pursuant to subparagraph (7) of Rule 424(b) of the Rules and Regulations; if for any reason the filing of the final form of Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory to you that the Prospectus contains such information and has been filed with the Commission within the time period prescribed; it will notify you promptly of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; promptly upon your request, it will prepare and file with the Commission any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel for the several Underwriters ("Underwriters' Counsel"), may be necessary or advisable in connection with the distribution of the Shares by the Underwriters; it will promptly prepare and file with the Commission, and promptly notify you of the filing of, any amendments or supplements to the Registration Statement or Prospectus which may be necessary to correct any 13

statements or omissions, if, at any time when a prospectus relating to the Shares is required to be delivered under the Act, any event shall have occurred as a result of which the Prospectus or any other prospectus relating to the Shares as then in effect would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; in case any Underwriter is required to deliver a prospectus nine (9) months or more after the effective date of the Registration Statement in connection with the sale of the Shares, it will prepare promptly upon request, but at the expense of such Underwriter, such amendment or amendments to the Registration Statement and such prospectus or prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act; and it will file no amendment or supplement to the Registration Statement or Prospectus which shall not previously have been submitted to you a reasonable time prior to the proposed filing thereof or to which you shall reasonably object in writing, subject, however, to compliance with the Act and the Rules and Regulations, and the provisions of this Agreement. (b) The Company will advise you, promptly after it shall receive notice or obtain knowledge, of the issuance of any stop order by the Commission suspending the effectiveness of the Registration Statement or of the initiation or threat of any proceeding for that purpose; and it will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued. (c) The Company will use its best efforts to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Shares, except that the Company shall not be required in connection therewith or as a condition thereof to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction in which it is not otherwise required to be so qualified or to so execute a general consent to service of process. In each jurisdiction in which the Shares shall have been qualified as above provided, the Company will make and file such statements and reports in each year as are or may be required by the laws of such jurisdiction. (d) The Company will furnish to you, as soon as available, and, in the case of the Prospectus and any term sheet or abbreviated term sheet under Rule 434, in no event later than the first (1st) full business day following the first day that Shares are traded, copies of the Registration Statement (three of which will be signed and which will include all exhibits), each Preliminary Prospectus, the Prospectus and any amendments or supplements to such documents, including any prospectus prepared to permit compliance with Section 10(a)(3) of the Act, all in such quantities as you may from time to time reasonably request. Notwithstanding the foregoing, if BancAmerica Robertson Stephens, on behalf of the several Underwriters, shall agree to the utilization of Rule 434 of the Rules and Regulations, the Company shall provide to you copies of a Preliminary Prospectus updated in all respects through the date specified by you in such quantities as you may from time to time reasonably request. To the extent applicable, such documents shall be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. 14

(e) The Company will make generally available to its securityholders as soon as practicable, but in any event not later than the forty-fifth (45th) day following the end of the fiscal quarter first occurring after the first anniversary of the effective date of the Registration Statement, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Act and covering a twelve (12) month period beginning after the effective date of the Registration Statement. To the extent applicable, such reports or documents shall be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (f) During a period of five (5) years after the date hereof, the Company will furnish to its stockholders as soon as practicable after the end of each respective period, annual reports (including financial statements audited by independent certified public accountants) and unaudited quarterly reports of operations for each of the first three quarters of the fiscal year, and will furnish to you and the other several Underwriters hereunder, upon request (i) concurrently with furnishing such reports to its stockholders, statements of operations of the Company for each of the first three (3) quarters in the form furnished to the Company's stockholders, (ii) concurrently with furnishing to its stockholders, a balance sheet of the Company as of the end of such fiscal year, together with statements of operations, of stockholders' equity, and of cash flows of the Company for such fiscal year, accompanied by a copy of the certificate or report thereon of independent certified public accountants, (iii) as soon as they are available, copies of all reports (financial or other) mailed to stockholders, (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, any securities exchange or the NASD, (v) every material press release and every material news item or article in respect of the Company or its affairs which was generally released to stockholders or prepared by the Company, and (vi) any additional information of a public nature concerning the Company, or its business which you may reasonably request. During such five (5) year period, if the Company shall have active subsidiaries, the foregoing financial statements shall be on a consolidated basis to the extent that the accounts of the Company and its subsidiaries are consolidated, and shall be accompanied by similar financial statements for any significant subsidiary which is not so consolidated. (g) The Company will apply the net proceeds from the sale of the Shares being sold by it in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (h) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for its Common Stock. (i) If the transactions contemplated hereby are not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed hereunder or to fulfill any condition of the Underwriters' obligations hereunder, or if the Company shall terminate this Agreement pursuant to Section 11(a) hereof, or if the Underwriters shall terminate this Agreement pursuant to Section 11(b)(i), the Company will 15

reimburse the several Underwriters for all out-of-pocket expenses (including fees and disbursements of Underwriters' Counsel) incurred by the Underwriters in investigating or preparing to market or marketing the Shares. (j) If at any time during the ninety (90) day period after the Registration Statement becomes effective, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above, forthwith prepare, consult with you concerning the substance of and disseminate a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. (k) During the Lock-Up Period, the Company will not, without the prior written consent of BancAmerica Robertson Stephens, effect the Disposition of, directly or indirectly, any securities other than (i) the sale of the Firm Shares and the Option Shares hereunder, (ii) the sale of shares of Common Stock to Japan Tobacco Inc. as described in the Prospectus, (iii) the sale of shares of Common Stock, or securities convertible into Common Stock, in connection with any corporate partnership or strategic alliance of the Company, provided that the recipient of such shares or securities agrees in writing not to effect the Disposition of, directly or indirectly, such shares or securities during the Lock-Up Period, without the prior written consent of BancAmercia Robertson Stephens, (iv) the issuance of shares of Common Stock, or securities convertible into Common Stock, in connection with the acquisition by the Company of any assets or other businesses, provided that the recipient of such shares or securities agrees in writing not to effect the Disposition of, directly or indirectly, such shares or securities during the Lock-Up Period, without the prior written consent of BancAmercia Robertson Stephens, (v) the Company's issuance of options or Common Stock under the Company's 1997 Equity Incentive Plan and Non-Employee Directors' Stock Option Plan (the "Option Plans"), (vi) the issuance of Common Stock upon the exercise of stock options issued under the Option Plans by directors, employees, or consultants of the Company, (vii) the issuance of Common Stock under the Company's Employee Stock Purchase Plan, or (viii) the issuance of Common Stock upon the exercise of warrants outstanding as of the date hereof, as described in the Prospectus, provided, however, that during the Lock-Up Period, the Company will obtain an executed Lock-Up Agreement from each person who wishes to exercise an option or warrant to purchase Common Stock prior to the issuance of such Common Stock. (l) During the Lock-Up Period, the Company will not file or cause to become effective any registration statement relating to any securities of the Company, including a registration statement registering shares under the Option Plan or other employee benefit plan, without the prior written consent of BancAmerica Robertson Stephens. 5. Expenses. (a) The Company agrees with each Underwriter that: (i) The Company will pay and bear all costs and expenses in connection with the preparation, printing and filing of the Registration Statement 16

(including financial statements, schedules and exhibits), Preliminary Prospectuses and the Prospectus and any amendments or supplements thereto; the printing of this Agreement, the Agreement Among Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire and Power of Attorney, and any instruments related to any of the foregoing; the issuance and delivery of the Shares hereunder to the several Underwriters, including transfer taxes, if any, the cost of all certificates representing the Shares and transfer agents' and registrars' fees; the fees and disbursements of counsel for the Company; all fees and other charges of the Company's independent certified public accountants; the cost of furnishing to the several Underwriters copies of the Registration Statement (including appropriate exhibits), Preliminary Prospectus and the Prospectus, and any amendments or supplements to any of the foregoing; NASD filing fees and the cost of qualifying the Shares under the laws of such jurisdictions as you may designate (including filing fees and fees and disbursements of Underwriters' Counsel in connection with such NASD filings and Blue Sky qualifications); and all other expenses directly incurred by the Company in connection with the performance of their obligations hereunder. (ii) In addition to its other obligations under Section 8(a) hereof, the Company agrees that, as an interim measure during the pendency of any claim, action, investigation, inquiry or other proceeding described in Section 8(a) hereof, it will reimburse the Underwriters on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company's obligation to reimburse the Underwriters for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement payment is so held to have been improper, the Underwriters shall promptly return such payment to the Company together with interest, compounded daily, determined on the basis of the prime rate (or other commercial lending rate for borrowers of the highest credit standing) listed from time to time in The Wall Street Journal which represents the base rate on corporate loans posted by a substantial majority of the nation's thirty (30) largest banks (the "Prime Rate"). Any such interim reimbursement payments which are not made to the Underwriters within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. (b) In addition to their other obligations under Section 8(b) hereof, the Underwriters severally and not jointly agree that, as an interim measure during the pendency of any claim, action, investigation, inquiry or other proceeding described in Section 8(b) hereof, they will reimburse the Company on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Underwriters' obligation to reimburse the Company for such expenses and the possibility that such payments might later be held to have been improper by a 17

court of competent jurisdiction. To the extent that any such interim reimbursement payment is so held to have been improper, the Company shall promptly return such payment to the Underwriters together with interest, compounded daily, determined on the basis of the Prime Rate. Any such interim reimbursement payments which are not made to the Company within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. (c) It is agreed that any controversy arising out of the operation of the interim reimbursement arrangements set forth in Sections 5(a)(ii) and 5(b) hereof, including the amounts of any requested reimbursement payments, the method of determining such amounts and the basis on which such amounts shall be apportioned among the reimbursing parties, shall be settled by arbitration conducted under the provisions of the Constitution and Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the NASD. Any such arbitration must be commenced by service of a written demand for arbitration or a written notice of intention to arbitrate, therein electing the arbitration tribunal. In the event the party demanding arbitration does not make such designation of an arbitration tribunal in such demand or notice, then the party responding to said demand or notice is authorized to do so. Any such arbitration will be limited to the operation of the interim reimbursement provisions contained in Sections 5(a)(ii) and 5(b) hereof and will not resolve the ultimate propriety or enforceability of the obligation to indemnify for expenses which is created by the provisions of Sections 8(a) and 8(b) hereof or the obligation to contribute to expenses which is created by the provisions of Section 8(d) hereof. 6. Conditions of Underwriters' Obligations. The obligations of the several Underwriters to purchase and pay for the Shares as provided herein shall be subject to the accuracy, as of the date hereof and the Closing Date and any later date on which Option Shares are to be purchased, as the case may be, of the representations and warranties of the Company herein, to the performance by the Company of their respective obligations hereunder and to the following additional conditions: (a) The Registration Statement shall have become effective not later than 2:00 P.M., San Francisco time, on the date of this Agreement or such later date as shall be consented to in writing by you; and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company or any Underwriter, threatened by the Commission, and any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the satisfaction of Underwriters' Counsel. (b) All corporate proceedings and other legal matters in connection with this Agreement, the form of Registration Statement and the Prospectus, and the registration, authorization, issue, sale and delivery of the Shares, shall have been reasonably satisfactory to Underwriters' Counsel, and such counsel shall have been furnished with such papers and information as they may reasonably have requested to enable them to pass upon the matters referred to in this Section. 18

(c) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, or any later date on which Option Shares are to be purchased, as the case may be, there shall not have been any change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company from that set forth in the Registration Statement or Prospectus, which, in your sole judgment, is material and adverse and that makes it, in your sole judgment, impracticable or inadvisable to proceed with the initial public offering of the Shares as contemplated by the Prospectus; and (d) You shall have received on the Closing Date and on any later date on which Option Shares are purchased, as the case may be, the following opinion of counsel for the Company, dated the Closing Date or such later date on which Option Shares are purchased, addressed to the Underwriters and with reproduced copies or signed counterparts thereof for each of the Underwriters, to the effect that: (i) The Company and each Significant Subsidiary (as that term is defined in Regulation S-X of the Act) (if any) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation; (ii) The Company and each Significant Subsidiary (if any) has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; (iii) To such counsel's knowledge, the Company and each Significant Subsidiary (if any) is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction, if any, in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on the financial condition, earnings, operations or business of the Company and its subsidiaries considered as one enterprise. To such counsel's knowledge, the Company does not own or control, directly or indirectly, any corporation, association or other entity. (iv) The authorized, issued and outstanding capital stock of the Company was as set forth in the Prospectus under the caption "Capitalization" as of the date stated therein, the issued and outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, and, to such counsel's knowledge, have not been issued in violation of or subject to any preemptive right, co-sale right granted by the Company, right of first refusal or other similar right; (v) All issued and outstanding shares of capital stock of each Significant Subsidiary of the Company (if any) have been duly authorized and validly issued and are fully paid and nonassessable, and, to such counsel's knowledge, have not been issued in violation of or subject to any preemptive right, co-sale right granted by the Company or such Significant Subsidiary, 19

right of first refusal or other similar right and are owned by the Company free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest; (vi) The Firm Shares or the Option Shares, as the case may be, have been duly authorized and, upon issuance and delivery against payment therefor in accordance with the terms hereof, will be duly and validly issued and fully paid and nonassessable, and will not have been issued in violation of or subject to any preemptive right, co-sale right granted by the Company, or, to such counsel's knowledge, right of first refusal, or other similar right; (vii) The Company has the corporate power and authority to enter into this Agreement and to issue, sell and deliver to the Underwriters the Shares to be issued and sold by it hereunder; (viii) This Agreement has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery by you, is a valid and binding agreement of the Company, enforceable in accordance with its terms, except insofar as indemnification and contribution provisions may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights generally or by general equitable principles and limitations on the availability of equitable remedies; (ix) The Registration Statement has become effective under the Act and, to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Act; (x) The Registration Statement and the Prospectus, and each amendment or supplement thereto (other than the financial statements (including supporting schedules), financial data and statistical data derived therefrom as to which such counsel need express no opinion), as of the effective date of the Registration Statement, complied as to form in all material respects with the requirements of the Act and the applicable Rules and Regulations; (xi) The terms and provisions of the capital stock of the Company conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus under the caption "Description of Capital Stock", the conversion of all of the Company's outstanding preferred stock into Common Stock has been duly completed as of the Closing Date, and the statements in the Prospectus under the captions "Capitalization" and "Description of Capital Stock," to the extent that they constitute summaries of matters of law or legal conclusions, have been reviewed by such counsel, are accurate, and fairly and correctly summarize such matters and conclusions to the extent required by the Act and applicable Rules and Regulations , and the form of certificate 20

evidencing the Common Stock filed as an exhibit to the Registration Statement complies with Delaware law; (xii) The descriptions in the Registration Statement and the Prospectus of the certificate of incorporation and bylaws of the Company and of specified sections of the Delaware General Corporation Law and of Rules 144 and 701 under the the Act are accurate and fairly present the information required to be presented with respect thereto by the Act and the applicable Rules and Regulations; (xiii) To such counsel's knowledge, there are no agreements, contracts, leases or documents to which the Company is a party of a character required to be described or referred to in the Registration Statement or Prospectus under the Act and applicable Rules and Regulations or to be filed as an exhibit to the Registration Statement which are not described or referred to therein or filed as required; (xiv) The performance of this Agreement and the consummation of the transactions herein contemplated (other than performance of the Company's indemnification and contribution obligations hereunder, concerning which no opinion need be expressed) will not (a) result in any violation of the Company's certificate of incorporation or bylaws or (b) to such counsel's knowledge, result in a material breach or violation of any of the terms and provisions of, or constitute a default under, any bond, debenture, note or other evidence of indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company is a party or by which its properties are bound and which is filed as an exhibit to the Registration Statement, or any applicable statute, rule or regulation known to such counsel (other than state securities or blue sky laws concerning which no opinion need be expressed) or, to such counsel's knowledge, any order, writ or decree of any court, government or governmental agency or body having jurisdiction over the Company or any Significant Subsidiaries, or over any of their properties or operations; (xv) No consent, approval, authorization or order of or qualification with any court, government or governmental agency or body having jurisdiction over the Company or any of its subsidiaries, or over any of their properties or operations is necessary in connection with the consummation by the Company of the transactions herein contemplated, except such as have been obtained under the Act or such as may be required under state or other securities or Blue Sky laws in connection with the purchase and the distribution of the Shares by the Underwriters; (xvi) To such counsel's knowledge, there are no legal or governmental proceedings pending or threatened against the Company or any of its subsidiaries of a character required to be disclosed in the Registration Statement or the Prospectus by the Act or the Rules and Regulations, other than those described therein; 21

(xvii) To such counsel's knowledge, except as set forth in the Registration Statement and Prospectus, no holders of Common Stock or other securities of the Company have registration rights with respect to securities of the Company, and all holders of securities of the Company having rights known to such counsel to registration of such shares of Common Stock or other securities, because of the filing of the Registration Statement by the Company have, with respect to the offering contemplated thereby, waived such rights, or such rights have expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement, or such rights do not apply to this offering as a result of notification of the underwriters' cutback of such registration rights in accordance with the agreement granting such registration rights. (xviii) The issuance of shares of Common Stock in the amount of $3,000,000 to Japan Tobacco Inc. in a private placement to close concurrently with the Closing, pursuant to the terms and conditions of the SharePurchase Agreement dated as of September 9, 1997 between the Company and Japan Tobacco Inc., is exempt from all registration requirements under the Act. In addition, such counsel shall state that such counsel has participated in conferences with officials and other representatives of the Company, the Representatives, Underwriters' Counsel and the independent public accountants of the Company, at which such conferences the contents of the Registration Statement and Prospectus and related matters were discussed, and although they have not verified and are not passing on the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, on the basis of the foregoing, nothing has come to the attention of such counsel which leads them to believe that, at the time the Registration Statement became effective, the Registration Statement, and any amendment thereto, when such amendment became effective (other than the financial statements 22

including supporting schedules, other financial information and statistical information derived therefrom, as to which such counsel need express no comment) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that as of its date or at the Closing Date or any later date on which the Option Shares are to be purchased, as the case may be, the Prospectus, and any amendment or supplement thereto (except as aforesaid), contained any untrue statement of a material fact or omitted to state material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Counsel rendering the foregoing opinion may rely as to questions of law not involving the laws of the United States or the States of California or Delaware upon opinions of local counsel, and as to questions of fact upon representations or certificates of officers of the Company and of government officials, in which case their opinion is to state that they are so relying and that they have no knowledge of any material misstatement or inaccuracy in any such opinion, representation or certificate. Copies of any opinion, representation or certificate so relied upon shall be delivered to you, as Representatives of the Underwriters, and to Underwriters' Counsel. (e) You shall have received on the Closing Date and on any later date on which Option Shares are to be purchased, as the case may be, an opinion of Testa, Hurwitz & Thibeault, LLP, in form and substance satisfactory to you, with respect to the sufficiency of all such corporate proceedings and other legal matters relating to this Agreement and the transactions contemplated hereby as you may reasonably require, and the Company shall have furnished to such counsel such documents as they may have requested for the purpose of enabling them to pass upon such matters. (f) You shall have received on the Closing Date and on any later date on which Option Shares are to be purchased, as the case may be, a letter from Arthur Andersen LLP addressed to the Company and the Underwriters, dated the Closing Date or such later date on which Option Shares are to be purchased, as the case may be, confirming that they are independent certified public accountants with respect to the Company within the meaning of the Act and the applicable published Rules and Regulations and based upon the procedures described in such letter delivered to you concurrently with the execution of this Agreement (herein called the "Original Letter"), but carried out to a date not more than five (5) business days prior to the Closing Date or such later date on which Option Shares are to be purchased, as the case may be, (i) confirming, to the extent true, that the statements and conclusions set forth in the Original Letter are accurate as of the Closing Date or such later date on which Option Shares are to be purchased, as the case may be, and (ii) setting forth any revisions and additions to the statements and conclusions set forth in the Original Letter which are necessary to reflect any changes in the facts described in the Original Letter since the date of such letter, or to reflect the availability of more recent financial statements, data or information. The letter shall not disclose any change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise from that set forth in the Registration Statement or Prospectus, which, in your sole judgment, is material and adverse and that makes it, 23

in your sole judgment, impracticable or inadvisable to proceed with the initial public offering of the Shares as contemplated by the Prospectus. The Original Letter from Arthur Andersen LLP shall be addressed to or for the use of the Underwriters in form and substance satisfactory to the Underwriters and shall (i) represent, to the extent true, that they are independent certified public accountants with respect to the Company within the meaning of the Act and the applicable published Rules and Regulations, (ii) set forth their opinion with respect to their examination of the consolidated balance sheet of the Company as of December 31, 1996 and related consolidated statements of operations, stockholders' equity, and cash flows for the twelve (12) months ended December 31, 1996, (iii) state that Arthur Andersen LLP has performed the procedure set out in Statement on Auditing Standards No. 71 ("SAS 71") for a review of interim financial information and providing the report of Arthur Andersen LLP as described in SAS 71 on the financial statements for the nine months ended September 30, 1997 (the "Quarterly Financial Statements"), (iv) state that in the course of such review, nothing came to their attention that leads them to believe that any material modifications need to be made to any of the Quarterly Financial Statements in order for them to be in compliance with generally accepted accounting principles consistently applied across the periods presented, and (v) address other matters agreed upon by Arthur Andersen LLP and you. In addition, you shall have received from Arthur Andersen LLP a letter addressed to the Company and made available to you for the use of the Underwriters stating that their review of the Company's system of internal accounting controls, to the extent they deemed necessary in establishing the scope of their examination of the Company's consolidated financial statements as of December 31, 1996, did not disclose any weaknesses in internal controls that they considered to be material weaknesses. (g) You shall have received on the Closing Date and on any later date on which Option Shares are to be purchased, as the case may be, a certificate of the Company, dated the Closing Date or such later date on which Option Shares are to be purchased, as the case may be, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and you shall be satisfied that: (i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of the Closing Date or any later date on which Option Shares are to be purchased, as the case may be, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date or any later date on which Option Shares are to be purchased, as the case may be; (ii) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Act; (iii) When the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Prospectus, and any amendments or supplements thereto, contained all material information required to be included therein by the Act and the Rules and Regulations and 24

in all material respects conformed to the requirements of the Act and the Rules and Regulations, the Registration Statement, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, the Prospectus, and any amendment or supplement thereto, did not and does not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth; and (iv) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been (a) any material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise, (b) any transaction that is material to the Company and its subsidiaries considered as one enterprise, except transactions entered into in the ordinary course of business, (c) any obligation, direct or contingent, that is material to the Company and its subsidiaries considered as one enterprise, incurred by the Company or its subsidiaries, except obligations incurred in the ordinary course of business, (d) any change in the capital stock or outstanding indebtedness of the Company or any of its subsidiaries that is material to the Company and its subsidiaries considered as one enterprise, (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of its subsidiaries, or (f) any loss or damage (whether or not insured) to the property of the Company or any of its subsidiaries which has been sustained or will have been sustained which has a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise. (h) You shall have received on the Closing Date, and on any later date on which Option Shares are to be purchased, the opinions of Seed & Berry, LLP and Larry S. Millstein, Esq., patent counsel to the Company, dated the Closing Date and such later date on which Option Shares are to be purchased, addressed to the Underwriters and with reproduced copies or signed counterparts thereof for each of the Underwriters, to the effect that they serve as patent counsel to the Company with respect to the Company's Intellectual Property, including those patents and patent applications referred to or described in the Registration Statement and Prospectus, which in some cases are licensed to the Company from various licensors (individually, a "Licensor"), and that: (i) There are no facts which would preclude the Company from having clear title to the Company's patents and patent applications referred to or described in the Prospectus, or a valid license to the patents and patent applications licensed from third parties referred to or described in the Registration Statement and Prospectus, and identified in such opinion. To the best of such counsel's knowledge, the Company and each Licensor has complied with the Patent and Trademark Office ("PTO") duty of 25

candor and good faith in dealing with the PTO, including the duty to disclose to the PTO all information known to be material to the patentability of each of such United States patents and patent applications. To the best of such counsel's knowledge, all assignments from each named inventor to the Company or Licensor, as the case may be, have been executed and recorded with the PTO for each patent and patent application. Such counsel has no knowledge that the Company lacks any rights or licenses to use all patents and know-how necessary to conduct the business now conducted or proposed to be conducted by the Company as described in the Registration Statement and Prospectus, except as described therein. Such counsel has no knowledge of any facts which would form a basis for a finding that any of the claims of the patents or patent applications owned or licensed by the Company is unpatentable, unenforceable or invalid. Such counsel is not aware of any pending U.S. or foreign patent applications which, if issued, would limit or prohibit the business now conducted or proposed to be conducted by the Company as described in the Registration Statement and the Prospectus, except as described therein. Such counsel is not aware of any patents of others which are or would be infringed by specific products or processes referred to in the Registration Statement and Prospectus in such manner as to materially and adversely affect the Company, except as described therein. Such counsel knows of no pending or threatened action, suit, proceeding or claim by others that the Company is infringing any patent which could result in any material adverse effect on the Company, except as described in the Registration Statement and the Prospectus; (ii) there are no legal or governmental proceedings pending relating to the Patent Rights, other than PTO review of pending applications for patents, including appeal proceedings, and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or others; and (iii) there are no contracts or other documents material to the Company's patents or proprietary information other than those described in the Registration Statement and the Prospectus. In addition, such counsel shall state that although they have not verified the accuracy or completeness of the statements contained in the Registration Statement and Prospectus, nothing has come to the attention of such counsel that caused them to believe that, at the time the Registration Statement became effective, or at the Closing Date or at any later date on which Option Shares are purchased, as the case may be, the Registration Statement or Prospectus contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (i) The Company shall have obtained and delivered to you an agreement from each officer and director and each beneficial owner of greater than 1% of the outstanding shares of capital stock of the Company, and certain additional securityholders of the Company, in writing prior to the date hereof that such person will not, during the Lock-Up Period, effect a Disposition of any Securities, otherwise than (i) as a bona fide gift or 26

gifts (including, but not limited to, a transfer without consideration to any trust for the benefit of any member of the immediate family of such person or to any partnership or other entity all of whose beneficial ownership is held by such person or members of his or her immediate family), provided the donee or donees thereof agree in writing to be bound by this restriction, (ii) as a distribution to limited partners or shareholders of such person, provided that the distributees thereof agree in writing to be bound by the terms of this restriction, or (iii) with the prior written consent of BancAmerica Robertson Stephens. The foregoing restriction shall have been expressly agreed to preclude the holder of the Securities from engaging in any hedging or other transaction which is designed to or reasonably expected to lead to or result in a Disposition of Securities during the Lock-Up Period, even if such Securities would be disposed of by someone other than the such holder. Such prohibited hedging or other transactions would including, without limitation, any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any Securities or with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from Securities. Furthermore, such person will have also agreed and consented to the entry of stop transfer instructions with the Company's transfer agent against the transfer of the Securities held by such person except in compliance with this restriction. (j) The Company shall have furnished to you such further certificates and documents as you shall reasonably request, including certificates of officers of the Company as to the accuracy of the representations and warranties of the Company herein, as to the performance by the Company of its obligations hereunder and as to the other conditions concurrent and precedent to the obligations of the Underwriters hereunder. All such opinions, certificates, letters and documents will be in compliance with the provisions hereof only if they are reasonably satisfactory to Underwriters' Counsel. The Company will furnish you with such number of conformed copies of such opinions, certificates, letters and documents as you shall reasonably request. 7. Option Shares. (a) On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company hereby grants to the several Underwriters, for the purpose of covering over-allotments in connection with the distribution and sale of the Firm Shares only, a nontransferable option to purchase up to an aggregate of 450,000 Option Shares at the purchase price per share for the Firm Shares set forth in Section 3 hereof. Such option may be exercised by the Representatives on behalf of the several Underwriters on one (1) or more occasions in whole or in part during the period of thirty (30) days after the date on which the Firm Shares are initially offered to the public, by giving written notice to the Company. The number of Option Shares to be purchased by each Underwriter upon the exercise of such option shall be the same proportion of the total number of Option Shares to be purchased by the several Underwriters pursuant to the exercise of such option as the number of Firm Shares purchased by such Underwriter (set forth in Schedule A 27

hereto) bears to the total number of Firm Shares purchased by the several Underwriters (set forth in Schedule A hereto), adjusted by the Representatives in such manner as to avoid fractional shares. Delivery of definitive certificates for the Option Shares to be purchased by the several Underwriters pursuant to the exercise of the option granted by this Section 7 shall be made against payment of the purchase price therefor by the several Underwriters by certified or official bank check or checks drawn in next-day funds, payable to the order of the Company (and the Company agrees not to deposit any such check in the bank on which it is drawn, and not to take any other action with the purpose or effect of receiving immediately available funds, until the business day following the date of its delivery to the Company). In the event of any breach of the foregoing, the Company shall reimburse the Underwriters for the interest lost and any other expenses borne by them by reason of such breach. Such delivery and payment shall take place at the offices of Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San Diego, CA 92121-2128, or at such other place as may be agreed upon among the Representatives and the Company (i) on the Closing Date, if written notice of the exercise of such option is received by the Company at least two (2) full business days prior to the Closing Date, or (ii) on a date which shall not be later than the third (3rd) full business day following the date the Company receives written notice of the exercise of such option, if such notice is received by the Company less than two (2) full business days prior to the Closing Date. The certificates for the Option Shares to be so delivered will be made available to you at such office or such other location including, without limitation, in New York City, as you may reasonably request for checking at least one (1) full business day prior to the date of payment and delivery and will be in such names and denominations as you may request, such request to be made at least two (2) full business days prior to such date of payment and delivery. If the Representatives so elect, delivery of the Option Shares may be made by credit through full fast transfer to the accounts at The Depository Trust Company designated by the Representatives. It is understood that you, individually, and not as the Representatives of the several Underwriters, may (but shall not be obligated to) make payment of the purchase price on behalf of any Underwriter or Underwriters whose check or checks shall not have been received by you prior to the date of payment and delivery for the Option Shares to be purchased by such Underwriter or Underwriters. Any such payment by you shall not relieve any such Underwriter or Underwriters of any of its or their obligations hereunder. (b) Upon exercise of any option provided for in Section 7(a) hereof, the obligations of the several Underwriters to purchase such Option Shares will be subject (as of the date hereof and as of the date of payment and delivery for such Option Shares) to the accuracy of and compliance with the representations, warranties and agreements of the Company herein, to the accuracy of the statements of the Company and officers of the Company made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, to the conditions set forth in Section 7 hereof and to the condition that all proceedings taken at or prior to the payment date in connection with the sale and transfer of such Option 28

Shares shall be satisfactory in form and substance to you and to Underwriters' Counsel, and you shall have been furnished with all such documents, certificates and opinions as you may request in order to evidence the accuracy and completeness of any of the representations, warranties or statements, the performance of any of the covenants or agreements of the Company or the satisfaction of any of the conditions herein contained. 8. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject (including, without limitation, in its capacity as an Underwriter or as a "qualified independent underwriter" within the meaning of Rule 2720(a)(15) of the Conduct Rules promulgated by the NASD), under the Act, the Exchange Act or otherwise, specifically including, but not limited to, losses, claims, damages or liabilities, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any breach of any representation, warranty, agreement or covenant of the Company herein contained, (ii) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any untrue statement or alleged untrue statement of any material fact contained in any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, such Preliminary Prospectus or the Prospectus, or any such amendment or supplement thereto, in reliance upon, and in conformity with, written information relating to any Underwriter furnished to the Company by such Underwriter, directly or through you, specifically for use in the preparation thereof and, provided further, that the indemnity agreement provided in this Section 8(a) with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any losses, claims, damages, liabilities or actions based upon any untrue statement or alleged untrue statement of material fact or omission or alleged omission to state therein a material fact purchased Shares, if a copy of the Prospectus in which such untrue statement or alleged untrue statement or omission or alleged omission was corrected had not been sent or given to such person within the time required by the Act and the Rules and Regulations, unless such failure is the result of noncompliance by the Company with Section 4(d) hereof. The indemnity agreement in this Section 8(a) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each person, if any, who controls any Underwriter within the meaning of the Act or the Exchange Act. This indemnity agreement shall be in addition to any liabilities which the Company may otherwise have. 29

(b) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company against any losses, claims, damages or liabilities, joint or several, to which the Company may become subject under the Act or otherwise, specifically including, but not limited to, losses, claims, damages or liabilities, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any breach of any representation, warranty, agreement or covenant of such Underwriter herein contained, (ii) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any untrue statement or alleged untrue statement of any material fact contained in any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in the case of subparagraphs (ii) and (iii) of this Section 8(b) to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter, directly or through you, specifically for use in the preparation thereof, and agrees to reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or action. The indemnity agreement in this Section 8(b) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each officer of the Company who signed the Registration Statement and each director of the Company, and each person, if any, who controls the Company within the meaning of the Act or the Exchange Act. This indemnity agreement shall be in addition to any liabilities which each Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notified the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of 30

the indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with appropriate local counsel) approved by the indemnifying party representing all the indemnified parties under Section 8(a) or 8(b) hereof who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. In no event shall any indemnifying party be liable in respect of any amounts paid in settlement of any action unless the indemnifying party shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnification could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) In order to provide for just and equitable contribution in any action in which a claim for indemnification is made pursuant to this Section 8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 8 provides for indemnification in such case, all the parties hereto shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Underwriters severally and not jointly are responsible pro rata for the portion represented by the percentage that the underwriting discount bears to the initial public offering price, and the Company is responsible for the remaining portion, provided, however, that (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the underwriting discount applicable to the Shares purchased by such Underwriter exceeds the amount of damages which such Underwriter is otherwise required to pay and (ii) no person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. The contribution agreement in this Section 8(d) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each person, if any, who controls any Underwriter or the Company within the meaning of the Act or the Exchange Act and each officer of the Company who signed the Registration Statement and each director of the Company. (e) The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations regarding the provisions hereof including, without limitation, the provisions of this Section 8, and are fully informed regarding said provisions. They further acknowledge that the provisions 31

of this Section 8 fairly allocate the risks in light of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement and Prospectus as required by the Act and the Exchange Act. 9. Representations, Warranties, Covenants and Agreements to Survive Delivery. All representations, warranties, covenants and agreements of the Company and the Underwriters herein or in certificates delivered pursuant hereto, and the indemnity and contribution agreements contained in Section 8 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter within the meaning of the Act or the Exchange Act, or by or on behalf of the Company or any of its officers, directors or controlling persons within the meaning of the Act or the Exchange Act, and shall survive the delivery of the Shares to the several Underwriters hereunder or termination of this Agreement. 10. Substitution of Underwriters. If any Underwriter or Underwriters shall fail to take up and pay for the number of Firm Shares agreed by such Underwriter or Underwriters to be purchased hereunder upon tender of such Firm Shares in accordance with the terms hereof, and if the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters so agreed but failed to purchase does not exceed 10% of the Firm Shares, the remaining Underwriters shall be obligated, severally in proportion to their respective commitments hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter or Underwriters. If any Underwriter or Underwriters so defaults and the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters agreed but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining Underwriters shall have the right, but shall not be obligated, to take up and pay for (in such proportions as may be agreed upon among them) the Firm Shares which the defaulting Underwriter or Underwriters so agreed but failed to purchase. If such remaining Underwriters do not, at the Closing Date, take up and pay for the Firm Shares which the defaulting Underwriter or Underwriters so agreed but failed to purchase, the Closing Date shall be postponed for twenty-four (24) hours to allow the several Underwriters the privilege of substituting within twenty-four (24) hours (including non-business hours) another underwriter or underwriters (which may include any nondefaulting Underwriter) satisfactory to the Company. If no such underwriter or underwriters shall have been substituted as aforesaid by such postponed Closing Date, the Closing Date may, at the option of the Company, be postponed for a further twenty-four (24) hours, if necessary, to allow the Company the privilege of finding another underwriter or underwriters, satisfactory to you, to purchase the Firm Shares which the defaulting Underwriter or Underwriters so agreed but failed to purchase. If it shall be arranged for the remaining Underwriters or substituted underwriter or underwriters to take up the Firm Shares of the defaulting Underwriter or Underwriters as provided in this Section 10, (i) the Company shall have the right to postpone the time of delivery for a period of not more than seven (7) full business days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees promptly to file any amendments to the Registration Statement, supplements to the Prospectus or other such documents which may thereby be made necessary, and (ii) the 32

respective number of Firm Shares to be purchased by the remaining Underwriters and substituted underwriter or underwriters shall be taken as the basis of their underwriting obligation. If the remaining Underwriters shall not take up and pay for all such Firm Shares so agreed to be purchased by the defaulting Underwriter or Underwriters or substitute another underwriter or underwriters as aforesaid and the Company shall not find or shall not elect to seek another underwriter or underwriters for such Firm Shares as aforesaid, then this Agreement shall terminate. In the event of any termination of this Agreement pursuant to the preceding paragraph of this Section 10, neither the Company shall be liable to any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any Underwriter (other than an Underwriter who shall have failed, otherwise than for some reason permitted under this Agreement, to purchase the number of Firm Shares agreed by such Underwriter to be purchased hereunder, which Underwriter shall remain liable to the Company and the other Underwriters for damages, if any, resulting from such default) be liable to the Company (except to the extent provided in Sections 5 and 8 hereof). The term "Underwriter" in this Agreement shall include any person substituted for an Underwriter under this Section 10. 11. Effective Date of this Agreement and Termination. (a) This Agreement shall become effective at the earlier of (i) 6:30 A.M., San Francisco time, on the first full business day following the effective date of the Registration Statement, or (ii) the time of the initial public offering of any of the Shares by the Underwriters after the Registration Statement becomes effective. The time of the initial public offering shall mean the time of the release by you, for publication, of the first newspaper advertisement relating to the Shares, or the time at which the Shares are first generally offered by the Underwriters to the public by letter, telephone, telegram or telecopy, whichever shall first occur. By giving notice as set forth in Section 12 before the time this Agreement becomes effective, you, as Representatives of the several Underwriters, or the Company, may prevent this Agreement from becoming effective without liability of any party to any other party, except as provided in Sections 4(i), 5 and 8 hereof. (b) You, as Representatives of the several Underwriters, shall have the right to terminate this Agreement by giving notice as hereinafter specified at any time on or prior to the Closing Date or on or prior to any later date on which Option Shares are to be purchased, as the case may be, (i) if the Company shall have failed, refused or been unable to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled is not fulfilled, including, without limitation, any change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise from that set forth in the Registration Statement or Prospectus, which, in your sole judgment, is material and adverse, or (ii) if additional material governmental restrictions, not in force and effect on the date hereof, shall have been imposed upon trading in securities generally or minimum or maximum prices 33

shall have been generally established on the New York Stock Exchange or on the American Stock Exchange or in the over the counter market by the NASD, or trading in securities generally shall have been suspended on either such exchange or in the over the counter market by the NASD, or if a banking moratorium shall have been declared by federal, New York or California authorities, or (iii) if the Company shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such character as to interfere materially with the conduct of the business and operations of the Company regardless of whether or not such loss shall have been insured, or (iv) if there shall have been a material adverse change in the general political or economic conditions or financial markets as in your reasonable judgment makes it inadvisable or impracticable to proceed with the offering, sale and delivery of the Shares, or (v) if there shall have been an outbreak or escalation of hostilities or of any other insurrection or armed conflict or the declaration by the United States of a national emergency which, in the reasonable opinion of the Representatives, makes it impracticable or inadvisable to proceed with the initial public offering of the Shares as contemplated by the Prospectus. In the event of termination pursuant to subparagraph (i) above, the Company shall remain obligated to pay costs and expenses pursuant to Sections 4(i), 5 and 8 hereof. Any termination pursuant to any of subparagraphs (ii) through (v) above shall be without liability of any party to any other party except as provided in Sections 5 and 8 hereof. If you elect to prevent this Agreement from becoming effective or to terminate this Agreement as provided in this Section 11, you shall promptly notify the Company by telephone, telecopy or telegram, in each case confirmed by letter. If the Company shall elect to prevent this Agreement from becoming effective, the Company shall promptly notify you by telephone, telecopy or telegram, in each case, confirmed by letter. 12. Notices. All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing and if sent to you shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and confirmed by letter) to you c/o BancAmerica Robertson Stephens, 555 California Street, Suite 2600, San Francisco, California 94104, telecopier number (415) 781-0278, Attention: General Counsel; if sent to the Company, such notice shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and confirmed by letter) to 10150 Old Columbia Road, Columbia, Maryland 21046, telecopier number (410) 309-3111, Attention: Chief Executive Officer. 13. Parties. This Agreement shall inure to the benefit of and be binding upon the several Underwriters and the Company and their respective executors, administrators, successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person or entity, other than the parties hereto and their respective executors, administrators, successors and assigns, and the controlling persons within the meaning of the Act or the Exchange Act, officers and directors referred to in Section 8 hereof, any legal or equitable right, remedy or claim in respect of this Agreement or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective executors, administrators, successors and assigns and said controlling persons and said officers and directors, and for the 34

benefit of no other person or entity. No purchaser of any of the Shares from any Underwriter shall be construed a successor or assign by reason merely of such purchase. In all dealings with the Company under this Agreement, you shall act on behalf of each of the several Underwriters, and the Company shall be entitled to act and rely upon any statement, request, notice or agreement made or given by you jointly or by BancAmerica Robertson Stephens on behalf of you. 14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. 15. Counterparts. This Agreement may be signed in several counterparts, each of which will constitute an original. 35

If the foregoing correctly sets forth the understanding among the Company and the several Underwriters, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Company and the several Underwriters. Very truly yours, GENE LOGIC INC. By: _____________________________ Michael J. Brennan, M.D., Ph.D. President and Chief Executive Officer Accepted as of the date first above written: BANCAMERICA ROBERTSON STEPHENS HAMBRECHT & QUIST LLC UBS SECURITIES LLC On their behalf and on behalf of each of the several Underwriters named in Schedule A hereto. BANCAMERICA ROBERTSON STEPHENS By: ____________________________________ Authorized Signatory 36

SCHEDULE A Number of Firm Shares To Be Underwriters Purchased BancAmerica Robertson Stephens.............................. Hambrecht & Quist LLC....................................... UBS Securities LLC.......................................... [NAMES OF OTHER UNDERWRITERS]

Total....................................................... 3,000,000 37

Exhibit 3.1 RESTATED CERTIFICATE OF INCORPORATION OF GENE LOGIC INC. (Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware) Gene Logic Inc., a Delaware corporation, hereby certifies as follows: 1. The name of the corporation is Gene Logic Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State was September 22, 1994, under the name Senatics Corporation. 2. This Restated Certificate of Incorporation amends, restates and integrates the provisions of the Certificate of Incorporation, as amended, of said corporation and has been duly adopted pursuant to a resolution adopted by the Board of Directors and by the holders of (a) at least 66 2/3% of the outstanding shares of Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock, voting together as a single class, (b) at least 66 2/3% of the outstanding shares of Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock, each series of Preferred Stock voting as a separate class, (c) not less than a majority of the outstanding shares of Common Stock, Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock, voting together as a single class, and (d) not less than a majority of the outstanding shares of Common Stock, voting as a separate class, acting by written consent in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. Written notice of the taking of such action has been given in accordance with Section 228(d) of the General Corporation Law of the State of Delaware. 3. The text of the Certificate of Incorporation is hereby amended and restated to read in full as follows: FIRST. The name of the Corporation is Gene Logic Inc. SECOND. The address, including street, number, city, and county, of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware; and the name of the registered agent of the Corporation in the State of Delaware is The Corporation Trust Company. THIRD. The nature of the business to be conducted and the purposes of the Corporation are: To purchase or otherwise acquire, invest in, own, lease, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade and deal in and with real property and personal property of every kind, class and description (including, without limitation, goods, 1.

wares and merchandise of every kind, class and description), to manufacture goods, wares and merchandise of every kind, class and description, both on its own account and for others; To make and perform agreements and contracts of every kind and description; To develop and acquire, manage, exploit, license and alienate patents, processes or formulas, trademarks and copyrights, including all related rights; To purchase or otherwise acquire, invest in, own, lease, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade and deal in and with real property and personal property of every kind, class and description (including, without limitation, goods, wares and merchandise of every kind, class and description), to manufacture goods, wares and merchandise of every kind, class and description, both on its own account and for others; To borrow or lend money, and to make and issue notes, bonds, debentures, obligations and evidences of indebtedness of all kinds, whether or not secured by mortgage, pledge, or otherwise, without limit as to amount, and to secure the same by mortgage, pledge, or otherwise, and generally to make and perform agreements and contracts of every kind and description; and Generally to engage in any lawful act or activity or carry on any business for which corporations may be organized under the Delaware General Corporation law or any successor statue. FOURTH. The Corporation shall be authorized to issue a total of 26,550,000 shares of capital stock, which shall be divided into two classes as follows: (i) 17,000,000 shares of Common Stock, with a par value of one cent ($.01) per share (the "Common Stock"), and (ii) 9,550,000 shares of Preferred Stock, divided into (a) 333,333 shares of Series A Convertible Preferred Stock, with a par value of one cent ($.01) per share (the "Series A Preferred Stock"), (b) 462,500 shares of Series A-1 Convertible Preferred Stock, with a par value of one cent ($.01) per share (the "Series A-1 Preferred Stock"), (c) 4,154,167 shares of Series B Convertible Preferred Stock, with a par value of one cent ($.01) per share (the "Series B Preferred Stock"), and (d) 4,600,000 shares of Series C Convertible Preferred Stock, with a par value of one cent ($.01) per share (the "Series C Preferred Stock"). The Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock shall be collectively known herein as the "Preferred Stock". The following is a statement of the designations, preferences, voting powers, qualifications, special or relative rights and privileges in respect of the authorized capital stock of the Corporation. 2.

A. Description and Designation of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. 1. Designation. (a) Series A Preferred Stock. A total of 333,333 shares of the Corporation's Preferred Stock shall be designated the "Series A Preferred Stock". (b) Series A-1 Preferred Stock. A total of 462,500 shares of the Corporation's Preferred Stock shall be designated the "Series A-1 Preferred Stock". (c) Series B Preferred Stock. A total of 4,154,167 shares of the Corporation's Preferred Stock shall be designated the "Series B Preferred Stock". (d) Series C Preferred Stock. A total of 4,600,000 shares of the Corporation's Preferred Stock shall be designated the "Series C Preferred Stock". 2. Dividends. (a) Restrictions on Distributions. Except to the extent in any instance approval is provided in writing by the holders of 66 2/3% of the outstanding shares of Preferred Stock (voting together as a single class), the Corporation shall not declare or pay any dividends, or purchase, redeem, retire, or otherwise acquire for value any shares of its capital stock (or rights, options or warrants to purchase such shares) now or hereafter outstanding, return any capital to its stockholders as such, or make any distribution of assets to its stockholders as such, or permit any Subsidiary to do any of the foregoing. "Subsidiary" or "Subsidiaries" means any corporation, partnership or joint venture of which the Corporation and/or any of its other Subsidiaries (as herein defined) directly or indirectly owns at the time at least fifty percent (50%) of the outstanding voting shares or similar interests other than directors' qualifying shares. Notwithstanding the foregoing, nothing herein contained shall prevent the Corporation from: (i) effecting a stock split or declaring or paying any dividend consisting of shares of any class of capital stock paid to the holders of shares of such class of capital stock; (ii) complying with any specific provision of the terms of the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock (including, without limitation, redemption of the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock in accordance with their respective terms), (iii) declaring and paying dividends on the Series B Preferred Stock and/or Series C Preferred Stock as provided in subsection (b) below; (iv) redeeming any stock of a deceased stockholder out of insurance held by the Corporation on that stockholder's life; or (v) repurchasing any stock of any director, officer, employee, consultant 3.

or other person or entity, subject to a stock repurchase agreement or stock restriction agreement under which the Corporation has the right or obligation to repurchase such shares in the event of termination of employment or of the consulting arrangement, or other similar discontinuation of a business relationship; provided, however, that any such repurchase under this clause (v) shall not exceed $50,000 in any twelve-month period without the consent of a majority of the Preferred Stock Directors (as defined in Section C below). Furthermore, Subsidiaries may declare and make payment of cash and stock dividends, return capital and make distributions of assets to the Corporation, and if such Subsidiary is not wholly-owned, pari passu to other owners. (b) Preferred Stock Dividends. The holders of Preferred Stock shall be entitled to receive, out of funds legally available therefore, when and if declared by the Board of Directors of the Corporation, dividends at the rate per annum of (i) $0.360 per share of Series C Preferred Stock, (ii) $0.176 per share of Series B Preferred Stock, (iii) $0.128 per share of Series A-1 Preferred Stock, and (iv) $0.120 per share of Series A Preferred Stock, each subject to adjustment for subdivisions (whether by stock split, stock dividend or otherwise), combinations (by reverse stock split or otherwise), or recapitalizations (the "Preferred Accruing Dividends"). Only for purposes of the application of the provisions Section A.3 and A.7 of this Article FOURTH as applicable, the Preferred Accruing Dividends shall accrue from day to day, commencing (w) for each share of Series C Preferred Stock on the date of original issuance of such share (x) for each share of Series B Preferred Stock on the date of original issuance of such share, (y) for each share of Series A-1 Preferred Stock, on the later of the date of issuance of such share or the date of filing of this Certificate of Incorporation, and (z) for each share of Series A Preferred Stock, on the date of filing of this Certificate of Incorporation. Except as provided in the immediately preceding sentence, the Preferred Accruing Dividends shall not accrue and shall not be cumulative and the holders of Preferred Stock shall have no right thereto except if and to the extent the Board of Directors, in its discretion, shall declare Preferred Accruing Dividends. In no event may Preferred Accruing Dividends be declared or paid on any Series of Preferred Stock unless Preferred Accruing Dividends in proportionate amounts are declared and paid at the same time as for all Series of Preferred Stock. (c) Participating Dividends. In the event that the Board of Directors of the Corporation shall declare a dividend payable upon the then outstanding shares of Common Stock (other than a stock dividend on the Common Stock distributed solely in the form of additional shares of Common Stock), the holders of the Preferred Stock shall be entitled to the amount of dividends per share of Preferred Stock as would be declared payable on the largest number of whole shares of Common Stock into which each share of Preferred Stock held by each holder thereof could be converted pursuant to the provisions of Section A.5 hereof, such number determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend. 4.

3. Liquidation, Dissolution or Winding Up. (a) Treatment at Liquidation, Dissolution or Winding Up (i) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, before any distribution or payment is made to any holders of Common Stock or any other class or Series of capital stock of the Corporation designated to be junior to the Preferred Stock, the holders of each share of Preferred Stock shall be entitled to be paid, on a pari passu basis, first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes whether such assets are capital, surplus or earnings (the "Available Assets"), an amount equal to: (A) $1.50 per share of Series A Preferred Stock then outstanding plus an amount per share equal to the Preferred Accruing Dividends for such share (as defined in Section A.2(b) of this Article FOURTH) unpaid thereon (whether or not declared), computed to the date payment thereof is made available, and any other declared but unpaid dividends thereon; (B) $1.60 per share of Series A-1 Preferred Stock then outstanding plus an amount per share equal to the Preferred Accruing Dividends for such share (as defined in Section A.2(b) of this Article FOURTH) unpaid thereon (whether or not declared), computed to the date payment thereof is made available, and any other declared but unpaid dividends thereon; (C) $2.20 per share of Series B Preferred Stock then outstanding plus an amount per share equal to the Preferred Accruing Dividends for such share (as defined in Section A.2(b) of this Article FOURTH) unpaid thereon (whether or not declared), computed to the date payment thereof is made available, and any other declared but unpaid dividends thereon; and (D) $4.50 per share of Series C Preferred Stock then outstanding plus an amount per share equal to the Preferred Accruing Dividends for such share (as defined in Section A.2(b) of this Article FOURTH) unpaid thereon (whether or not declared), computed to the date payment thereof is made available, and any other declared but unpaid dividends thereon. The amounts set forth above shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, as the case may be. 5.

If, upon liquidation, dissolution or winding up of the Corporation, the Available Assets shall be insufficient to pay the holders of Preferred Stock the full amount to which they otherwise would be entitled, the holders of Preferred Stock shall share ratably in any distribution of Available Assets pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of Preferred Stock if all liquidation preference dollar amounts with respect to such shares were paid in full. (ii) After payment has been made in full to the holders of the Preferred Stock as provided in (i) above or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of the holders of Preferred Stock so as to be available for such payment, the remaining Available Assets available for distribution shall be distributed ratably among the holders of Preferred Stock and Common Stock, assuming for such purpose that each share of Preferred Stock had been converted to Common Stock immediately prior to such event of liquidation, dissolution or winding up pursuant to the provisions of Section A.5 hereof. (b) Treatment of Reorganizations, Consolidations, Mergers, and Sales of Assets. A Reorganization (as defined in Section A.5(i)) shall be regarded as a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this Section 3; provided, however, that the holders of at least 66 2/3% of the outstanding shares of Preferred Stock, voting together as a single class, shall have the right to elect the benefits of the provisions of Section A.5(i) hereof for the Preferred Stock in lieu of receiving payment in liquidation, dissolution or winding up of the Corporation pursuant to this Section 3. The provisions of this Section 3(b) shall not apply to any Reorganization involving (1) only a change in the state of incorporation of the Corporation, (2) a merger of the Corporation with or into a wholly-owned Subsidiary of the Corporation that is incorporated in the United States of America, or (3) an acquisition by merger, reorganization or consolidation, of which the Corporation is substantively the acquiring corporation and operates as a going concern, of another corporation that is engaged in a business similar or related to the business of the Corporation and which does not involve a change in the terms of the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock. (c) Distributions Other than Cash. Whenever the distribution provided for in this Section 3 shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the Corporation. All distributions (including distributions other than cash) made hereunder shall be made pro rata with respect to the holders of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in proportion to their respective liquidation preference amounts as set forth in Section 3(a) 6.

above. In the event of any dispute between the holders of Preferred Stock on the one hand, and the Corporation, on the other hand, regarding the determination of the fair market value of non-cash distributions, at the election of the holders of 66 2/3% of the outstanding shares of Preferred Stock, voting together as a single class, the Corporation shall engage a consulting or investment banking firm selected by the Board of Directors and approved (which approval shall not be unreasonably withheld) by the holders of 66 2/3% of the outstanding shares of Preferred Stock, voting together as a single class, to prepare an independent appraisal of the fair market value of such property to be distributed. The expenses of any appraisal by such consulting or investment banking firm shall be borne by the Corporation. 4. Voting Rights. Except as otherwise expressly provided in this Restated Certificate of Incorporation, including, without limitation, Section A.6 and Section C of this Article FOURTH, or as otherwise required by law, each holder of Preferred Stock shall be entitled to vote on all matters and shall be entitled to that number of votes equal to the largest number of whole shares of Common Stock into which such holder's shares of Preferred Stock could be converted, pursuant to the provisions of Section A.5 hereof, at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. Except as otherwise expressly provided in this instrument or as otherwise required by law, the holders of shares of Preferred Stock and Common Stock shall vote together (or render written consents in lieu of a vote) as a single class on all matters submitted to the stockholders of the Corporation. 5. Conversion Rights. The holders of shares of Preferred Stock shall have the following rights with respect to the conversion of such shares into shares of Common Stock: (a) General. Subject to and in compliance with the provisions of this Section 5, any shares of Preferred Stock may, at the option of any holder, be converted at any time and from time to time into fully-paid and non-assessable shares of Common Stock. The number of shares of Common Stock to which a holder of shares of Preferred Stock shall be entitled to receive upon conversion shall be the product obtained by multiplying the Applicable Conversion Rate (determined as provided in Section A.5(b)) by the number of shares of the applicable Series of Preferred Stock being converted at any time. (b) Applicable Conversion Rate. (i) The conversion rate in effect at any time for the Series A Preferred Stock shall be the quotient obtained by dividing $1.50 by the Series A Applicable Conversion Value, calculated as provided in Section A.5(c)(i) (the "Series A Applicable Conversion Rate"); 7.

(ii) The conversion rate in effect at any time for the Series A-1 Preferred Stock shall be the quotient obtained by dividing $1.60 by the Series A-1 Applicable Conversion Value, calculated as provided in Section A.5(c)(ii) (the "Series A-1 Applicable Conversion Rate"); (iii) The conversion rate in effect at any time for the Series B Preferred Stock shall be the quotient obtained by dividing $2.20 by the Series B Applicable Conversion Value, calculated as provided in Section A.5(c)(iii) (the "Series B Applicable Conversion Rate"); and (iv) The conversion rate in effect at any time for the Series C Preferred Stock shall be the quotient obtained by dividing $4.50 by the Series C Applicable Conversion Value, calculated as provided in Section A.5(c)(iv) (the "Series C Applicable Conversion Rate"). (c) Applicable Conversion Value. (i) The Series A Applicable Conversion Value in effect from time to time except as adjusted in accordance with Section A.5(d) or Section A.5(e)(i) hereof, shall be $1.50 (the "Series A Applicable Conversion Value"); (ii) The Series A-1 Applicable Conversion Value in effect from time to time, except as adjusted in accordance with Section A.5(d) or Section A.5(e)(ii) hereof, shall be $1.60 (the "Series A-1 Applicable Conversion Value"); (iii) The Series B Applicable Conversion Value in effect from time to time, except as adjusted in accordance with Section A.5(d) or Section A.5(e)(iii) hereof, shall be $2.20 (the "Series B Applicable Conversion Value"); and (iv) The Series C Applicable Conversion Value in effect from time to time, except as adjusted in accordance with Section A.5(d) or Section A.5(e)(iv) hereof, shall be $4.50 (the "Series C Applicable Conversion Value"). The Series A Applicable Conversion Value, the Series A-1 Applicable Conversion Value, the Series B Applicable Conversion Value and the Series C Applicable Conversion Value may hereinafter be called, individually, the "Applicable Conversion Value". (d) Adjustments to Applicable Conversion Value. (i) Upon Dilutive Issuances of Common Stock or Convertible Securities. (A) If the Corporation shall, while there are any shares of Preferred Stock outstanding, issue or sell shares of its Common Stock or Common Stock 8.

Equivalents, without consideration or at a price per share less than the Applicable Conversion Value for a particular Series of Preferred Stock in effect immediately prior to such issuance or sale, then in each such case the Applicable Conversion Value for such Series of Preferred Stock, upon each such issuance or sale, except as hereinafter provided, shall be lowered so as to be equal to an amount determined by multiplying the Applicable Conversion Value for such Series of Preferred Stock by a fraction: (1) the numerator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully diluted basis assuming the exercise or conversion of all presently exercisable options, warrants, purchase rights or convertible securities), plus (b) the number of shares of Common Stock which the net aggregate consideration, if any, received by the Corporation for the total number of such additional shares of Common Stock or Common Stock Equivalents so issued would purchase at the Applicable Conversion Value for such Series of Preferred Stock in effect immediately prior to such issuance; and (2) the denominator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully diluted basis assuming the exercise or conversion of all presently exercisable options, warrants, purchase rights or convertible securities) plus (b) the number of such additional shares of Common Stock or Common Stock Equivalents so issued. (ii) Upon Other Dilutive Issuances of Warrants, Options and Purchase Rights to Common Stock or Convertible Securities. (A) (1) Common Stock Equivalents. For the purposes of this Section A.5(d), the issuance of any warrants, options, subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock, or the issuance of any warrants, options, subscription or purchase rights with respect to such convertible or exchangeable securities (collectively, "Common Stock Equivalents"), shall be deemed an issuance of Common Stock with respect to a Series of Preferred Stock if the Net Consideration Per Share (as hereinafter determined) which may be received by the Corporation for such Common Stock shall be less than the Applicable Conversion Value for such Series of Preferred Stock in effect at the time of such issuance. Any obligation, agreement or undertaking to issue Common Stock Equivalents at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of any Applicable Conversion Value shall be made under this Section 5(d) upon the issuance of any shares of Common Stock which are issued pursuant to the exercise, conversion or exchange of any 9.

Common Stock Equivalents if any adjustment shall previously have been made upon the issuance of any such Common Stock Equivalents as above provided. (2) Adjustments for Cancellation or Expiration of Common Stock Equivalents. Should the Net Consideration Per Share of any such Common Stock Equivalents be increased or decreased from time to time, then, upon the effectiveness of each such change, the Applicable Conversion Value for each Series of Preferred Stock will be that which would have been obtained (i) had the adjustments made upon the issuance of such Common Stock Equivalents been made upon the basis of the actual Net Consideration Per Share (as so increased or decreased) of such securities, and (ii) had adjustments made to such Applicable Conversion Value since the date of issuance of such Common Stock Equivalents been made to such Applicable Conversion as adjusted pursuant to (i) above. Any adjustment of any Applicable Conversion Value with respect to this paragraph which relates to Common Stock Equivalents shall be disregarded if, as, and when all of such Common Stock Equivalents expire or are canceled without being exercised, so that the Applicable Conversion Value (for a particular Series of Preferred Stock) effective immediately upon cancellation or expiration shall be equal to the Applicable Conversion Value in effect at the time of the issuance of the expired or canceled Common Stock Equivalents, with such additional adjustments as would have been made to such Applicable Conversion Value had the expired or canceled Common Stock Equivalents not been issued. (B) Net Consideration Per Share. For purposes of this Section A.5(d), the "Net Consideration Per Share" which may be received by the Corporation shall be determined as follows: (1) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Corporation for the issuance of such Common Stock Equivalents, plus the minimum amount of consideration, if any, payable to the Corporation upon exercise, or conversion or exchange thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such Common Stock Equivalents were exercised, exchanged or converted. (2) The "Net Consideration Per Share" which may be received by the Corporation shall be determined in each instance as of the date of issuance of Common Stock Equivalents, giving effect to any possible future rate adjustments which may be applicable with respect to such Common Stock Equivalents only upon the effectiveness of such rate adjustments. 10.

(iii) Stock Dividends for Holders of Capital Stock Other than Common Stock. In the event that the Corporation shall make or issue, or shall fix a record date for the determination of holders of any capital stock of the Corporation, other than holders of Common Stock entitled to receive a dividend or other distribution payable in Common Stock or securities of the Corporation convertible into or otherwise exchangeable for the Common Stock of the Corporation, then such Common Stock or other securities issued in payment of such dividend shall be deemed to have been issued for a consideration of $.01, except for (i) dividends payable in shares of Common Stock payable pro rata to holders of Preferred Stock and to holders of any other class of stock (whether or not paid to holders of any other class of stock), or (ii) with respect to the Preferred Stock, dividends payable in shares of Preferred Stock; provided, however, that holders of any shares of Preferred Stock shall be entitled to receive such shares of Common Stock for which the shares of Preferred Stock are then convertible. (iv) Consideration Other than Cash. For purposes of this Section 5(d), if a part or all of the consideration received by the Corporation in connection with the issuance of shares of the Common Stock or the issuance of any of the securities described in this Section 5(d) consists of property other than cash, such consideration shall be deemed to have a fair market value as is reasonably determined in good faith by the Board of Directors of the Corporation. In the event of any dispute between the holders of the Preferred Stock as to the fair market value of the consideration, at the option of the holders of a majority of the outstanding shares of Preferred Stock, the Corporation shall engage a consulting firm or investment banking firm selected by the holders of a majority of the outstanding shares of Preferred Stock to prepare an independent appraisal of the fair market value of such property to be distributed. The expenses of such appraisal shall be borne by the Corporation. (v) Exceptions to Anti-dilution; Basket for Reserved Employee Shares. This Section 5(d) shall not apply under any of the circumstances which would constitute an Extraordinary Common Stock Event (as defined in Section A.5(e) below). Further, this Section 5(d) shall not apply with respect to: (A) the issuance or sale of 2,000,000 shares of Common Stock or such additional number of shares of Common Stock as authorized by the Board of Directors (including the Preferred Stock Directors), or the grant of options exercisable therefor, to directors, officers, employees and consultants of the Corporation or any subsidiary pursuant to any qualified or non-qualified stock option plan or agreement, stock purchase plan or agreement, stock restriction agreement, employee stock ownership plan (ESOP), consulting agreement, or such other options, issuances, arrangements, agreements or plans approved by a majority of the members of the Board of Directors. (B) shares of Common Stock issued or issuable upon the exercise of outstanding warrants for an aggregate of 50,000 shares of Series A-1 Preferred 11.

Stock issued to the holders of Series A-1 Preferred Stock in connection with the acquisition of such shares; (C) shares of Common Stock issued or issuable upon the exercise of warrants issued in connection with the establishment or maintenance by the Corporation of credit facilities or equipment financing transactions, approved in each case by the Board of Directors of the Corporation; (D) shares of Common Stock issued or deemed issued in connection with that certain Equity Adjustment Agreement dated March 29, 1996, by and between the Corporation and Michael J. Brennan, M.D., Ph.D.; (E) shares of Common Stock issued or issuable in connection with the acquisition of operating assets (including patents, licenses and other intellectual property rights) or other businesses or the establishment of joint ventures or strategic business relationships approved in each case by the Board of Directors of the Corporation; and (F) 66,666 shares of Common Stock issued or issuable to BIOS Laboratories, Inc., provided, that, if less than 66,666 shares are issued to BIOS Laboratories, Inc., the remaining shares may be issued under (A) above. All such numbers shall be subject to equitable adjustment in the event of any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Corporation. (e) Adjustments to Applicable Conversion Value of Each Series of Preferred Stock for Extraordinary Common Stock Events. (i) Upon the happening of an Extraordinary Common Stock Event (as hereinafter defined), the Series A Applicable Conversion Value shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the Series A Applicable Conversion Value by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Series A Applicable Conversion Value. The Series A Applicable Conversion Value, as so adjusted, shall be readjusted in the same manner upon the happening of any successive Extraordinary Common Stock Event or Events. (ii) Upon the happening of an Extraordinary Common Stock Event, the Series A-1 Applicable Conversion Value shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the Series A-1 Applicable Conversion Value by a fraction, the numerator of which shall be the number of shares of 12.

Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Series A-1 Applicable Conversion Value. The Series A-1 Applicable Conversion Value, as so adjusted, shall be readjusted in the same manner upon the happening of any successive Extraordinary Common Stock Event or Events. (iii) Upon the happening of an Extraordinary Common Stock Event, the Series B Applicable Conversion Value shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the Series B Applicable Conversion Value by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Series B Applicable Conversion Value. The Series B Applicable Conversion Value, as so adjusted, shall be readjusted in the same manner upon the happening of any successive Extraordinary Common Stock Event or Events. (iv) Upon the happening of an Extraordinary Common Stock Event, the Series C Applicable Conversion Value shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the Series C Applicable Conversion Value by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Series C Applicable Conversion Value. The Series C Applicable Conversion Value, as so adjusted, shall be readjusted in the same manner upon the happening of any successive Extraordinary Common Stock Event or Events. An "Extraordinary Common Stock Event" shall mean (i) the issue of additional shares of Common Stock as a dividend or other distribution on outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of Common Stock into a greater number of shares of Common Stock, or (iii) a combination or reverse stock split of outstanding shares of Common Stock into a smaller number of shares of the Common Stock. (f) Mandatory Conversion Upon Public Offering or Election of Preferred Stock. (i) Mandatory Conversion of Preferred Stock. Immediately (A) prior to the closing of an underwritten public offering on a firm commitment basis pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation in which the 13.

Corporation actually receives gross proceeds equal to or greater than $20,000,000 (calculated after deducting underwriters' discounts and commissions but before calculation of expenses), and in which the price per share of Common Stock equals or exceeds $10.00 (such price subject to equitable adjustment in the event of any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the Common Stock) all outstanding shares of all Series of Preferred Stock shall be converted automatically into the number of shares of Common Stock into which such shares of Preferred Stock are then convertible pursuant to this Section 5 as of the stated date of approval of such holders of Preferred Stock, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, or (B) upon the election, set forth in a written notice to the Corporation, of the holders of at least 66 2/3% of the then outstanding shares of Preferred Stock, voting as a single class, of an election to convert the outstanding shares of Preferred Stock into Common Stock, all outstanding shares of all Series of Preferred Stock shall be converted automatically into the number of shares of Common Stock into which such shares of Preferred Stock are then convertible pursuant to this Section 5 as of the stated date of election of such holders of Preferred Stock, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. (ii) Surrender of Certificates Upon Mandatory Conversion. Upon the occurrence of the applicable conversion events specified in the preceding paragraph (i), the holders of the Preferred Stock so converting shall, upon notice from the Corporation, surrender the certificates representing such shares at the office of the Corporation or of its transfer agent for the Common Stock. Thereupon, there shall be issued and delivered to such holders a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock so surrendered were convertible on the date on which such conversion occurred. The Corporation shall not be obligated to issue such certificates unless certificates evidencing the shares of Preferred Stock being converted are either delivered to the Corporation or any such transfer agent, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. After any such conversion in accordance with Section 5(f)(i), all certificates evidencing the shares of Preferred Stock so converted shall be deemed to represent the number of shares of Common Stock into which such shares of Preferred Stock have been so convertible. (g) Dividends. In the event the Corporation shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution (other than a distribution in liquidation or other distribution otherwise provided for herein) with respect to the Common Stock payable in (i) securities of the Corporation other than shares of Common Stock, or (ii) other assets (excluding cash 14.

dividends or distributions), then and in each such event, provision shall be made so that the holders of shares of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Corporation which they would have received had their shares of Preferred Stock been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the Conversion Date (as that term is hereafter defined in Section 5(k)), retained such securities or such other assets receivable by them during such period, giving application to all other adjustments called for during such period under this Section 5 with respect to the rights of the holders of the Preferred Stock. (h) Capital Reorganization or Reclassification. If the Common Stock issuable upon the conversion of the Preferred Stock shall be changed into the same or different number of shares of any class or classes of capital stock, whether by capital reorganization, recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for elsewhere in this Section 5, or the sale of all or substantially all of the Corporation's capital stock or assets to any other person), then and in each such event the holder of each share of Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of capital stock and other securities and property receivable upon such reorganization, recapitalization, reclassification or other change by the holders of the number of shares of Common Stock into which such shares of Preferred Stock might have been converted immediately prior to such reorganization, recapitalization, reclassification or change, all subject to further adjustment as provided herein; provided that the Corporation shall not effect any such reorganization, recapitalization, reclassification or change involving another corporation or entity without the prior written agreement of such other corporation or entity to be bound by and give effect to the provisions of this Section 5(h). (i) Capital Reorganization, Merger or Sale of Assets. If at any time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, recapitalization, reclassification or exchange of shares provided for elsewhere in this Section 5) or a merger, or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all of the Corporation's capital stock or assets to any other person, or any other form of business combination or reorganization in which control of the Corporation is transferred (a "Reorganization"), then, as a part of and as a condition to such Reorganization, provision shall be made so that the holders of shares of Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock the same kind and amount of stock or other securities or property (including cash) of the Corporation, or of the successor corporation resulting from such Reorganization to which such holder would have been entitled if such holder had converted its shares of Preferred Stock immediately prior to the effective time of such Reorganization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5 to 15.

the end that the provisions of this Section 5 (including adjustment of the Series A Applicable Conversion Value, the Series A-1 Applicable Conversion Value, the Series B Applicable Conversion Value and the Series C Applicable Conversion Value then in effect and the number of shares of Common Stock or other securities issuable upon conversion of shares of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock) shall be applicable after that event in as nearly equivalent a manner as may be reasonably practicable. In the case of a transaction to which both this Section 5(i) and Section A.3(b) apply, the holders of at least 66 2/3% of the outstanding shares of Preferred Stock, voting together as a single class, upon the occurrence of a Reorganization shall have the option of electing treatment for the shares of Preferred Stock under either this Section 5(i) or Section A.3(b) hereof, notice of which election shall be submitted in writing to the Corporation at its principal office no later than five (5) business days before the effective date of such event. If no such election shall be made, the provisions of Section A.3(b), and not this Section 5(i), shall apply. The provisions of this Section 5(i) shall not apply to any reorganization, merger or consolidation involving (1) only a change in the state of incorporation of the Corporation, (2) a merger of the Corporation with or into a wholly-owned subsidiary of the Corporation, that is incorporated in the United States of America, or (3) an acquisition by merger, reorganization or consolidation, of which the Corporation is substantively the surviving corporation and operates as a going concern, of another corporation that is engaged in a business similar or related to the business of the Corporation and which does not involve a change in the terms of the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or Common Stock. (j) Certificate as to Adjustments; Notice by Corporation. In each case of an adjustment or readjustment of the Series A Applicable Conversion Rate, the Series A-1 Applicable Conversion Rate, the Series B Applicable Conversion Rate or the Series C Applicable Conversion Rate, the Corporation at its expense will furnish each holder of the applicable shares of Preferred Stock so affected with a certificate prepared by the Treasurer or Chief Financial Officer of the Corporation, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. (k) Exercise of Conversion Privilege. To exercise its conversion privilege, a holder of Preferred Stock shall surrender the certificate or certificates representing the shares being converted to the Corporation at its principal office, and shall give written notice to the Corporation at that office that such holder elects to convert such shares. Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock issuable upon such conversion shall be issued. The certificate or certificates for shares of Preferred Stock surrendered for conversion shall be accompanied by 16.

proper assignment thereof to the Corporation or in blank. The date when such written notice is received by the Corporation, together with the certificate or certificates representing the shares of Preferred Stock being converted, shall be the "Conversion Date." As promptly as practicable after the Conversion Date, the Corporation shall issue and deliver to the holder of the shares of Preferred Stock being converted, or on such holder's written order, such certificate or certificates as it may request for the number of whole shares of Common Stock issuable upon the conversion of such shares of Preferred Stock in accordance with the provisions of this Section 5, and cash, as provided in Section 5(l), in respect of any fraction of a share of Common Stock issuable upon such conversion. Such conversion shall be deemed to have been effected immediately prior to the close of business on the Conversion Date, and at such time the rights of the holder as holder of the converted shares of Preferred Stock shall cease and the person(s) in whose name(s) any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (l) Cash in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon the conversion of shares of Preferred Stock. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion any shares of Preferred Stock, the Corporation shall pay to the holder of the shares of Preferred Stock which were converted, a cash adjustment in respect of such fractional shares in an amount equal to the same fraction of the market price per share of the Common Stock (as determined in a reasonable manner prescribed by the Board of Directors) at the close of business on the Conversion Date. The determination as to whether or not any fractional shares are issuable shall be based upon the aggregate number of shares of Preferred Stock being converted at any one time by any holder thereof, not upon each share of Preferred Stock being converted. (m) Partial Conversion. In the event some but not all of the shares of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, represented by a certificate(s) surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, which were not converted. (n) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock (including any shares of Preferred Stock represented by any warrants, options, subscription or purchase rights for Preferred Stock) and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to 17.

effect the conversion of all then outstanding shares of Preferred Stock (including any shares of Preferred Stock represented by any warrants, options, subscriptions or purchase rights for such Preferred Stock), the Corporation shall take such action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. (o) No Reissuance of Preferred Stock. No share or shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation shall from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. 6. Restrictions and Limitations. The holders of the Preferred Stock shall have the following rights with respect to corporate action by the Corporation: (a) The Corporation shall not take any corporate action or otherwise amend its Restated Certificate of Incorporation without the approval by vote or written consent of the holders of at least 66 2/3% of the then outstanding shares of Preferred Stock, each share of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock to be entitled to one vote in each instance, if such corporate action or amendment would change any of the rights, preferences, privileges of or limitations provided for herein for the benefit of any shares of Preferred Stock or materially adversely affect the rights of the holders of the Preferred Stock, provided, however, that if such action or amendment would impact only the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, or impact such Series in a different manner, such action or amendment shall be governed by paragraph (b), (c), (d) or (e) below. Without limiting the generality of the foregoing, the Corporation will not amend its Restated Certificate of Incorporation or take any other corporate action without the approval by the holders of at least 66 2/3% of the then outstanding shares of Preferred Stock, voting together as a single class, if such amendment or corporate action would: (i) cause or authorize the Corporation to redeem, purchase or otherwise acquire for value (or pay into or set aside for a sinking fund for such purpose) or to distribute or sell any assets to the holders of, any share or shares of equity securities of the Corporation in their capacity as such, other than (A) as provided for in Sections A.2, A.3 or A.7 hereof, (B) repurchases from employees, officers or consultants pursuant to stock repurchase agreements or similar vesting arrangements approved by the Board of Directors and (C) other than as provided in that certain Stock Repurchase Agreement, dated as of April 2, 1996, by and between the Corporation and the State of Maryland/Department of Business and Economic Development; or 18.

(ii) authorize, create or issue, or obligate the Corporation to authorize, create or issue, additional shares of any class of stock ranking senior to or on a parity with the Preferred Stock with respect to liquidation preferences, redemption rights or dividend rights; or (iii) provide for the voluntary liquidation, dissolution, recapitalization, reorganization or winding up of the Corporation; or (iv) cause or authorize any Reorganization transaction, whether by merger, consolidation, reorganization, sale of capital stock or sale of substantially all of the Corporation's assets, in which control of the voting securities or assets of the Corporation is transferred in any way to persons or entities who were not stockholders of the Corporation immediately prior to any such event; or (v) otherwise amend the Corporation's Restated Certificate of Incorporation. (b) The Corporation shall not take any corporate action or otherwise amend its Restated Certificate of Incorporation without the approval by vote or written consent of the holders of at least 66 2/3% of the then outstanding shares of Series A Preferred Stock, each share of Series A Preferred Stock to be entitled to one vote in each instance, if such corporate action or amendment would change any of the rights, preferences, privileges of or limitations provided for herein for the benefit of any shares of Series A Preferred Stock or materially adversely affect the rights of the holders of the Series A Preferred Stock. Without limiting the generality of the foregoing, the Corporation will not amend its Certificate of Incorporation or take any other corporate action without the approval by the holders of at least 66 2/3% of the then outstanding shares of Series A Preferred Stock voting as a separate class, if such amendment or corporate action would: (i) reduce the amount payable to the holders of the Series A Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or (ii) adversely affect the liquidation preferences, redemption rights, dividend rights or voting rights of the holders of the Series A Preferred Stock; or (iii) cancel or modify the conversion rights of the holders of the Series A Preferred Stock provided for in Section A.5 herein; or (iv) amend or modify the rights of the holders of Series A-1 Preferred Stock, Series B Preferred Stock or Series C Preferred Stock to confer on the holders of the shares of any such Series of Preferred Stock rights or preferences that are not held by the holders of Series A Preferred Stock. 19.

(c) The Corporation shall not take any corporate action or otherwise amend its Restated Certificate of Incorporation without the approval by vote or written consent of the holders of at least 66 2/3% of the then outstanding shares of Series A-1 Preferred Stock, each share of Series A-1 Preferred Stock to be entitled to one vote in each instance, if such corporate action or amendment would change any of the rights, preferences, privileges of or limitations provided for herein for the benefit of any shares of Series A-1 Preferred Stock or materially adversely affect the rights of the holders of the Series A-1 Preferred Stock. Without limiting the generality of the foregoing, the Corporation will not amend its Certificate of Incorporation or take any other corporate action without the approval by the holders of at least 66 2/3% of the then outstanding shares of Series A-1 Preferred Stock voting as a separate class, if such amendment or corporate action would: (i) reduce the amount payable to the holders of the Series A-1 Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or (ii) adversely affect the liquidation preferences, redemption rights, dividend rights or voting rights of the holders of the Series A-1 Preferred Stock; or (iii) cancel or modify the conversion rights of the holders of the Series A-1 Preferred Stock provided for in Section A.5 herein; or (iv) amend or modify the rights of the holders of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock to confer on the holders of the shares of any such Series of Preferred Stock rights or preferences that are not held by the holders of Series A-1 Preferred Stock. (d) The Corporation shall not take any corporate action or otherwise amend its Restated Certificate of Incorporation without the approval by vote or written consent of the holders of at least 66 2/3% of the then outstanding shares of Series B Preferred Stock, each share of Series B Preferred Stock to be entitled to one vote in each instance, if such corporate action or amendment would change any of the rights, preferences, privileges of or limitations provided for herein for the benefit of any shares of Series B Preferred Stock or materially adversely affect the rights of the holders of the Series B Preferred Stock. Without limiting the generality of the foregoing, the Corporation will not amend its Certificate of Incorporation or take any other corporate action without the approval by the holders of at least 66 2/3% of the then outstanding shares of Series B Preferred Stock voting as a separate class, if such amendment or corporate action would: (i) reduce the amount payable to the holders of the Series B Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or 20.

(ii) adversely affect the liquidation preferences, redemption rights, dividend rights or voting rights of the holders of the Series B Preferred Stock; or (iii) cancel or modify the conversion rights of the holders of the Series B Preferred Stock provided for in Section A.5 herein; or (iv) amend or modify the rights of the holders of Series A Preferred Stock, Series A-1 Preferred Stock or Series C Preferred Stock to confer on the holders of the shares of any such Series of Preferred Stock rights or preferences that are not held by the holders of Series B Preferred Stock. (e) The Corporation shall not take any corporate action or otherwise amend its Restated Certificate of Incorporation without the approval by vote or written consent of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, each share of Series C Preferred Stock to be entitled to one vote in each instance, if such corporate action or amendment would change any of the rights, preferences, privileges of or limitations provided for herein for the benefit of any shares of Series C Preferred Stock or materially adversely affect the rights of the holders of the Series C Preferred Stock. Without limiting the generality of the foregoing, the Corporation will not amend its Certificate of Incorporation or take any other corporate action without the approval by the holders of at least a majority of the then outstanding shares of Series C Preferred Stock voting as a separate class, if such amendment or corporate action would: (i) reduce the amount payable to the holders of the Series C Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or (ii) adversely affect the liquidation preferences, redemption rights, dividend rights or voting rights of the holders of the Series C Preferred Stock; or (iii) cancel or modify the conversion rights of the holders of the Series C Preferred Stock provided for in Section A.5 herein; or (iv) amend or modify the rights of the holders of Series A Preferred Stock, Series A-1 Preferred Stock or Series B Preferred Stock to confer on the holders of the shares of any such Series of Preferred Stock rights or preferences that are not held by the holders of Series C Preferred Stock; or (v) change any of the rights, preferences or privileges of or materially adversely affect the rights of the Series C Preferred Stock; or (vi) cause or authorize the Corporation to redeem, purchase or otherwise acquire for value (or pay into or set aside for a sinking fund for such purpose) or to 21.

distribute or sell any assets to the holders of, any share or shares of equity securities of the Corporation in their capacity as such, other than (A) as provided for in Sections A.2, A.3 or A.7 hereof, (B) repurchases from employees, officers or consultants pursuant to stock repurchase agreements or similar vesting arrangements approved by the Board of Directors and (C) other than as provided in that certain Stock Repurchase Agreement dated as of April 2, 1996, by and between the Corporation and the State of Maryland/Department of Business and Economic Development; or (vii) authorize, create or issue, or obligate the Corporation to authorize, create or issue, shares of any class of stock ranking senior to or in parity with the Series C Preferred Stock with respect to liquidation preferences, redemption rights or dividend rights; or (viii) provide for the voluntary liquidation, dissolution, recapitalization, reorganization or winding up of the Corporation; or (ix) cause or authorize a reorganization transaction, whether by merger, consolidation, reorganization, sale of capital stock or sale of substantially all of the Corporation's assets, in which control of the voting securities or assets of the Corporation is transferred in any way to persons or entities who were not stockholders of the Corporation immediately prior to such event; or (x) otherwise amend the Corporation's Restated Certificate of Incorporation. 7. Redemption of Preferred Stock. (a) At the option and written election of the holders of at least a majority of the outstanding shares of Preferred Stock, on March 31, 2002 (the "First Redemption Date"), and on the 31st day of March in 2003 and 2004 (each, a "Redemption Date"), the Corporation shall call for redemption and shall redeem, according to the percentages listed below, any unconverted shares of Preferred Stock:
Date of Redemption -----------------March 31, 2002 March 31, 2003 March 31, 2004 Percentage of Shares then Outstanding to be Redeemed ------------------------------33 1/3% 50% 100%

The redemption price for each share of each Series of Preferred Stock redeemed pursuant to this Section A.7 shall be (i) $1.50 per share of Series A Preferred Stock plus all declared and unpaid dividends thereon, if any, (ii) $1.60 per share of Series A-1 Preferred stock plus all 22.

declared and unpaid dividends thereon, if any, (iii) $2.20 per share of Series B Preferred Stock plus an amount per share equal to the Series B Accruing Dividends (as defined in Section A.2(b), unpaid thereon (whether or not declared), computed to the date payment thereof is made available), and (iv) $4.50 per share of Series C Preferred Stock plus an amount per share equal to the Series C Accruing Dividends (as defined in Section A.2(b), unpaid thereon (whether or not declared), computed to the date payment thereof is made available), and any other dividends declared but unpaid thereon (the "Redemption Price"). The Redemption Price shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the Series A Preferred Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, as the case may be. Each redemption of Preferred Stock shall be made so that the number of shares of Preferred Stock held by each registered owner shall be reduced in an amount which shall bear the same ratio to the total number of shares of Preferred Stock being so redeemed as the number of shares of Preferred Stock then held by such registered owner bears to the aggregate number of shares of Preferred Stock then outstanding. (b) If the holders of a majority of the outstanding shares of Preferred Stock elect to have the Corporation redeem all of the outstanding shares of Preferred Stock as aforesaid, notice to that effect shall be given by such holders to the Corporation at least 45 days prior to the Initial Redemption Date. If such notice is given, then notice of redemption shall be sent by the Corporation by first class mail, postage prepaid, to each holder of record of the Preferred Stock to be redeemed, not less than 30 days nor more than 45 days prior to each Redemption Date, at his, her or its address as it appears on the books of the Corporation; provided, however, that the Corporation's failure to give such notice shall in no way affect its obligation to redeem the shares of Preferred Stock as provided in Section 7(a) hereof. Such notice shall set forth (i) the date and place of redemption; (ii) the number of shares to be redeemed and (iii) the Redemption Price. (c) If, on or before any Redemption Date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Preferred Stock, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such Redemption Date, and all rights of holders of such shares so called for redemption shall forthwith, after such Redemption Date, cease and terminate, excepting only the right to receive the redemption funds therefor to which they are entitled, but without interest. Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it. In 23.

case any holder of Preferred Stock which shall have been called for redemption shall not, within six years after the final Redemption Date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares of Preferred Stock shall be returned to the Corporation forthwith. (d) If the funds of the Corporation legally available for redemption of shares of Preferred Stock on any Redemption Date are insufficient to redeem the total number of shares of Preferred Stock submitted for redemption, those funds which are legally available shall be used to redeem the maximum possible number of whole shares ratably among the holders of such shares in proportion to the full amount such holders would otherwise be entitled to receive in redemption of such shares. The shares of Preferred Stock not redeemed shall remain outstanding and entitled to all rights and preferences provided herein. At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Preferred Stock, such funds shall be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available. 8. No Dilution or Impairment. The Corporation will not, by amendment of its Restated Certificate of Incorporation or through any reorganization, transfer of capital stock or assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Preferred Stock set forth herein, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Preferred Stock against dilution or other impairment. Without limiting the generality of the foregoing, the Corporation (a) will not increase the par value of any shares of stock receivable on the conversion of the Preferred Stock above the amount payable therefor on such conversion, and (b) will take all such action as may be necessary or appropriate in order that the Corporation may validly and legally issue fully paid and nonassessable shares of stock on the conversion of all Preferred Stock from time to time outstanding. 9. Notices of Record Date. In the event of: (a) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any 24.

shares of capital stock of any class or any other securities or property or to receive any other right, or (b) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other Corporation, or any other entity or person, or (c) any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then and in each such event the Corporation shall deliver or cause to be delivered to each holder of Preferred Stock a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (iii) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up. Such notice shall be delivered by facsimile transmission, hand delivery or overnight courier service to the holders of the Preferred Stock at the address given to the Corporation for notice purposes, at least ten (10) days prior to the date specified in such notice on which such action is to be taken, except in the case of an involuntary dissolution, which notice shall be provided within three (3) days following the date upon which the Corporation receives notice of such event. 10. Amendments and Waivers. Subject to the provisions of Paragraph A.6 hereof, any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Corporation and the written consent of the holders of 66 2/3% of the then outstanding shares of Preferred Stock, taken together as a class for this purpose, provided that if such amendment or waiver would affect only one such Series of Preferred Stock, only the written consent of the holders of 66 2/3% of the then outstanding shares of such Series shall be required. Any amendment or waiver so effected shall be binding upon the Corporation and any holder of Preferred Stock. B. Common Stock 1. Priority. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations or restrictions of the Common Stock are expressly made subject to and subordinate to those that may be fixed with respect to the Preferred Stock. 25.

2. Voting Rights. Each holder of record of Common Stock shall be entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation. Except as otherwise required by law, this Restated Certificate of Incorporation, and any Certificate of Designation with respect to any Preferred Stock, the holders of Common Stock and Preferred Stock shall vote together as a single class on all matters submitted to stockholders for a vote. 3. Dividends. Subject to provisions of law, this Restated Certificate of Incorporation and any Certificate of Designation with respect to any Preferred Stock, the holders of Common Stock shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board of Directors may determine in their sole discretion. 4. Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the payment or provision for payment of all debts and liabilities of the Corporation and all preferential amounts to which the holders of the Preferred Stock are entitled with respect to the distribution of assets in liquidation, the holders of Common stock shall be entitled to share ratably in the remaining assets of the Corporation available for distribution, subject to any rights of holders of Preferred Stock to participate with the holders of Common Stock in any such distribution of remaining assets. C. Board of Directors 1. Size and Election of the Board of Directors. The number of directors constituting the Board of Directors of the Corporation shall at all times be set at six (6). The members of the Board of Directors shall be elected in accordance with this Section C. The rights in this Section C shall terminate at such time as the Corporation closes an underwritten public offering of Common Stock pursuant to an offering registered under the Securities Act of 1933 and filed with the Securities and Exchange Commission on Form S-1 in which the aggregate gross proceeds to the Corporation equals or exceeds $20,000,000 and in which the price per share of such Common Stock equals or exceeds $10.00 (such price subject to equitable adjustment in the event of any stock split, stock dividend, combination, reorganization, reclassification or other similar event). 2. Series A and Series A-1 Director Election Right. (a) The holders of at least a majority of the outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock, voting together as a single class, shall be entitled to elect one (1) director of the Corporation (the "Series A Director"). At any annual or special meeting of the Corporation (or in a written consent in lieu thereof) held for the purpose of electing directors the presence in person or by proxy (or by written consent) of the 26.

holders of least a majority of the outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock shall constitute a quorum for the election of the Series A Director. (b) Any Series A Director may be removed during his or her term of office, without cause, by and only by, the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of the Series A Preferred Stock and Series A-1 Preferred Stock, voting together as a single class. A vacancy in the seat held by the Series A Director shall be filled by vote or written consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock, voting together as a single class. 3. Series B Director Election Right. (a) The holders of at least a majority of the outstanding shares of Series B Preferred Stock, voting together as a separate class, shall be entitled to elect one (1) director of the Corporation (the "Series B Director"). At any annual or special meeting of the Corporation (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or by written consent) of the holders of at least a majority of the outstanding shares of Series B Preferred Stock shall constitute a quorum for the election of the Series B Director. (b) Any Series B Director may be removed during his or her term of office, without cause, by and only by, the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of the Series B Preferred Stock, voting together as a separate class. A vacancy in the seat held by any Series B Director shall be filled by vote or written consent of the holders of at least a majority of the outstanding shares of Series B Preferred Stock, voting together as a separate class. 4. Series C Director Election Right. (a) The holders of at least a majority of the outstanding shares of Series C Preferred Stock, voting together as a separate class, shall be entitled to elect one (1) director of the Corporation (the "Series C Director") (the Series A Director, the Series B Director and the Series C Director may be referred to herein as the "Preferred Stock Directors"). At any annual or special meeting of the Corporation (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or by written consent) of the holders of at least a majority of the outstanding shares of Series C Preferred Stock shall constitute a quorum for the election of the Series C Director. (b) Any Series C Director may be removed during his or her term of office, without cause, by and only by, the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of the Series C Preferred Stock, voting together as a separate class. A vacancy in the seat held by any Series C Director shall be filled by vote or 27.

written consent of the holders of at least a majority of the outstanding shares of Series C Preferred Stock, voting together as a separate class. 5. Remaining Directors. (a) The holders of at least a majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class, shall be entitled to elect three (3) directors of the Corporation (the "Remaining Directors"). At any annual or special meeting of the Corporation (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or by written consent) of the holders of a majority of the outstanding shares of Common Stock and Preferred Stock shall constitute a quorum for the election of the Remaining Directors. (b) Any Remaining Director may be removed during his or her term of office, without cause, by and only by, the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of the Common Stock and Preferred Stock, voting together as a single class. A vacancy in the seat held by any Remaining Director shall be filled by vote or written consent of the holders of at least a majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class. FIFTH. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the by-laws of the Corporation with the vote or written consent of two-thirds of the members of the Board of Directors. SIXTH. The Corporation shall, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was or has agreed to be a director, officer of the Corporation or while a director or officer is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against any and all expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement or incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require the Corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any repeal or modification of the 28.

foregoing provisions of this Article SIXTH shall not adversely affect any right or protection of a director or officer of this Corporation existing at the time of such repeal or modification. SEVENTH. A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this Article SEVENTH shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal. EIGHTH. The Corporation is to have perpetual existence. IN WITNESS WHEREOF, GENE LOGIC INC., has caused this Restated Certificate of Incorporation to be signed by its President and Chief Executive Officer, Michael J. Brennan, this 15th day of July, 1997.
/s/ Michael J. Brennan ---------------------------------Michael J. Brennan

Exhibit 3.2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION GENE LOGIC INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is GENE LOGIC INC. 2. The corporation's original Certificate of Incorporation was filed with the Secretary of State on September 22, 1994. 3. The Amended and Restated Certificate of Incorporation of this corporation, in the form attached hereto as Exhibit A, has been duly adopted by the Board of Directors and by the stockholders of the corporation in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware. 4. The Amended and Restated Certificate of Incorporation so adopted reads in full as set forth in Exhibit A attached hereto and hereby incorporated by reference. IN WITNESS WHEREOF, GENE LOGIC INC. has caused this Amended and Restated Certificate of Incorporation to be signed by its President and Chief Executive Officer and attested to by its Senior Vice President and Chief Financial Officer this ____ day of ______________, 1997.

MICHAEL J. BRENNAN, M.D., Ph.D. President and Chief Executive Officer Attest:

MARK D. GESSLER Senior Vice President and Chief Financial Officer

Exhibit A AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF GENE LOGIC INC. I. The name of this corporation is GENE LOGIC INC. II. The address of the registered office of the corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, and the name of the registered agent of the corporation in the State of Delaware at such address is The Corporation Trust Company. III. The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware. IV. A. This corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the corporation is authorized to issue is Seventy Million (70,000,000) shares. Sixty Million (60,000,000) shares shall be Common Stock, each having a par value of one cent ($.01). Ten Million (10,000,000) shares shall be Preferred Stock, each having a par value of one cent ($.01). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, by filing a certificate (a "Preferred Stock Designation") pursuant to the Delaware General Corporation Law, to fix or alter from time to time the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions of any wholly unissued series of Preferred Stock, and to establish from time to time the number of shares constituting any such series or any of them; and to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of 1.

such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. V. For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and regulation of the powers of the corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that: A. 1. The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted by the Board of Directors. 2. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the adoption and filing of this Certificate of Incorporation, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the adoption and filing of this Certificate of Incorporation, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the adoption and filing of this Certificate of Incorporation, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Article, each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. 3. Subject to the rights of the holders of any series of Preferred Stock, no director shall be removed without cause. Subject to any limitations imposed by law, 2.

the Board of Directors or any individual director may be removed from office at any time with cause by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of voting stock of the corporation entitled to vote at an election of directors (the "Voting Stock"). 4. Subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified. B. 1. Subject to paragraph (h) of Section 43 of the By-laws, the By-laws may be altered or amended or new By-laws adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the Voting Stock. The Board of Directors shall also have the power to adopt, amend or repeal By-laws. 2. The directors of the corporation need not be elected by written ballot unless the By-laws so provide. 3. No action shall be taken by the stockholders of the corporation except at an annual or special meeting of stockholders called in accordance with the By-laws, and no action shall be taken by the stockholders by written consent. 4. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in the By-laws of the corporation. VI. A. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the 3.

corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. B. Any repeal or modification of this Article VI shall be prospective and shall not affect the rights under this Article VI in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification. VII. A. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in paragraph B of this Article VII, and all rights conferred upon the stockholders herein are granted subject to this reservation. B. Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law, this Certificate of Incorporation or any Preferred Stock Designation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend or repeal Articles V, VI and VII. 4.

Exhibit 3.4 BY-LAWS OF GENE LOGIC INC.

ARTICLE I. OFFICES................................................1
Section 1. Section 2. Section 3. Section Section Section Section Section Section Section Section Section Section Section 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Registered Office................................1 Other Offices....................................1 CORPORATE SEAL.........................................1 Corporate Seal...................................1 STOCKHOLDERS' MEETINGS.................................1 Place Of Meetings................................1 Annual Meetings..................................1 Special Meetings.................................3 Notice Of Meetings...............................4 Quorum...........................................4 Adjournment And Notice Of Adjourned Meetings.....4 Voting Rights....................................5 Joint Owners Of Stock............................5 List Of Stockholders.............................5 Action Without Meeting...........................5 Organization.....................................6 DIRECTORS..............................................6 Number And Term Of Office........................6 Powers...........................................6 Classes Of Directors.............................6 Vacancies........................................7 Resignation......................................7 Removal..........................................7 Meetings.........................................7 Annual Meetings..................................8 Regular Meetings.................................8 Special Meetings.................................8 Telephone Meetings...............................8 Notice Of Meetings...............................8 Waiver Of Notice.................................8 Quorum And Voting................................8 Action Without Meeting...........................9 Fees And Compensation............................9 Committees......................................10 Executive Committee.............................10 Other Committees................................10

ARTICLE II. ARTICLE III.

ARTICLE IV.

Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. (a) (b) (c) (d) (e) (f) Section 22. Section 23. Section 24. Section 25. (a) (b)

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ARTICLE V.

(c) (d) Section 26. Section 27. Section 28. (a) (b) (c) (d) (e) (f) Section 29. Section 30. Section 31. Section 32. Section 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43.

ARTICLE VI.

ARTICLE VII.

ARTICLE ARTICLE ARTICLE ARTICLE

Section Section Section Section Section VIII. Section IX. Section Section X. Section XI. Section

Term............................................10 Meetings........................................11 Organization....................................11 OFFICERS..............................................11 Officers Designated.............................11 Tenure And Duties Of Officers...................11 General.........................................12 Duties Of Chairman Of The Board Of Directors....12 Duties Of President.............................12 Duties Of Vice Presidents.......................12 Duties Of Secretary.............................12 Duties Of Chief Financial Officer...............12 Delegation Of Authority.........................13 Resignations....................................13 Removal.........................................13 EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION................13 Execution Of Corporate Instruments..............13 Voting Of Securities Owned By The Corporation...14 SHARES OF STOCK.......................................14 Form And Execution Of Certificates..............14 Lost Certificates...............................15 Transfers.......................................15 Fixing Record Dates.............................15 Registered Stockholders.........................16 OTHER SECURITIES OF THE CORPORATION...................16 Execution Of Other Securities...................16 DIVIDENDS.............................................16 Declaration Of Dividends........................16 Dividend Reserve................................17 FISCAL YEAR...........................................17 Fiscal Year.....................................17 INDEMNIFICATION.......................................17 Indemnification Of Directors, Executive Officers, Other Officers, Employees And Other Agents......17

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Directors And Executive Officers................17 Other Officers, Employees and Other Agents......17 Expenses........................................17 Enforcement.....................................18 Non-Exclusivity Of Rights.......................19 Survival Of Rights..............................19 Insurance.......................................19 Amendments......................................19 Saving Clause...................................19 Certain Definitions.............................19 NOTICES...............................................20 Section 44. Notices.........................................20 (a) Notice To Stockholders..........................20 (b) Notice To Directors.............................20 (c) Affidavit Of Mailing............................20 (d) Time Notices Deemed Given.......................21 (e) Methods Of Notice...............................21 (f) Failure To Receive Notice.......................21 (g) Notice To Person With Whom Communication Is Unlawful........................................21 (h) Notice To Person With Undeliverable Address.....21 ARTICLE XIII. AMENDMENTS............................................22 Section 45. Amendments......................................22 ARTICLE XIV. LOANS TO OFFICERS.....................................22 Section 46. Loans To Officers...............................22

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

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BY-LAWS OF GENE LOGIC INC. (A DELAWARE CORPORATION) ARTICLE I OFFICES Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II CORPORATE SEAL Section 3. Corporate Seal. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE III STOCKHOLDERS' MEETINGS Section 4. Place Of Meetings. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the corporation required to be maintained pursuant to Section 2 hereof. Section 5. Annual Meetings. (a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. (b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought

before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year's proxy statement, notice by the stockholder to be timely must be so received not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or, in the event public announcement of the date of such annual meeting is first made by the corporation fewer than seventy (70) days prior to the date of such annual meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the corporation. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder's meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (b), and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted. (c) Only persons who are nominated in accordance with the procedures set forth in this paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation in accordance with the provisions of paragraph (b) of this Section 5. Such 2

stockholder's notice shall set forth (i) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (b) of this Section 5. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (c). The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these By-laws, and if he should so determine, he shall so declare at the meeting, and the defective nomination shall be disregarded. (d) For purposes of this Section 5, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act. Section 6. Special Meetings. (a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption) and shall be held at such place, on such date, and at such time as the Board of Directors, shall fix. (b) If a special meeting is called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall determine the time and place of such special meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120) days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of 3

Section 7 of these By-laws. If the notice is not given within sixty (60) days after the receipt of the request, the person or persons requesting the meeting may set the time and place of the meeting and give the notice. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held. Section 7. Notice Of Meetings. Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these By-laws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, all action taken by the holders of a majority of the vote cast, excluding abstentions, at any meeting at which a quorum is present shall be valid and binding upon the corporation; provided, however, that directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these By-laws, a majority of the outstanding shares of such class or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and, except where otherwise provided by the statute or by the Certificate of Incorporation or these By-laws, the affirmative vote of the majority (plurality, in the case of the election of directors) of the votes cast, including abstentions, by the holders of shares of such class or classes or series shall be the act of such class or classes or series. Section 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares casting votes, excluding 4

abstentions. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these By-laws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the right to do so either in person or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period. Section 11. Joint Owners Of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the General Corporation Law of Delaware, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest. Section 12. List Of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof and may be inspected by any stockholder who is present. Section 13. Action Without Meeting. No action shall be taken by the stockholders except at an annual or special meeting of stockholders called in accordance with these By-laws, and no action shall be taken by the stockholders by written consent. 5

Section 14. Organization. (a) At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting. (b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure. ARTICLE IV DIRECTORS Section 15. Number And Term Of Office. The authorized number of directors of the corporation shall be fixed in accordance with the Certificate of Incorporation. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these By-laws. Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation. Section 17. Classes Of Directors. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock of the 6

corporation (the "Initial Public Offering"), the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Section 17, each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 18. Vacancies. Unless otherwise provided in the Certificate of Incorporation, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this By-law in the case of the death, removal or resignation of any director. Section 19. Resignation. Any director may resign at any time by delivering his written resignation to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be vacated and until his successor shall have been duly elected and qualified. Section 20. Removal. Subject to the rights of the holders of any series of Preferred Stock, no director shall be removed without cause. Subject to any limitations imposed by law, the Board of Directors or any individual director may be removed from office at any time with cause by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of voting stock of the corporation entitled to vote at an election of directors (the "Voting Stock"). 7

Section 21. Meetings. (a) Annual Meetings. The annual meeting of the Board of Directors shall be held immediately before or after the annual meeting of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it. (b) Regular Meetings. Except as hereinafter otherwise provided, regular meetings of the Board of Directors shall be held in the office of the corporation required to be maintained pursuant to Section 2 hereof. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may also be held at any place within or without the State of Delaware which has been designated by resolution of the Board of Directors or the written consent of all directors. (c) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board, the President or any two of the directors (d) Telephone Meetings. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. (e) Notice Of Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (f) Waiver Of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting. 8

Section 22. Quorum And Voting. (a) Unless the Certificate of Incorporation requires a greater number and except with respect to indemnification questions arising under Section 43 hereof, for which a quorum shall be one-third of the exact number of directors fixed from time to time in accordance with the Certificate of Incorporation, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of Incorporation; provided, however, at any meeting whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these By-laws. Section 23. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 24. Fees And Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. Section 25. Committees. (a) Executive Committee.The Board of Directors may by resolution passed by a majority of the whole Board of Directors appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, including without limitation the power or authority to declare a dividend, to authorize the issuance of stock and to adopt a certificate of ownership and merger, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors fix the designations and any of the preferences or rights of such shares relating to dividends, 9

redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation. (b) Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, from time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall such committee have the powers denied to the Executive Committee in these By-laws. (c) Term. Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such member's term on the Board of Directors. The Board of Directors, subject to the provisions of subsections (a) or (b) of this By-law may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director 10

attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. Section 26. Organization. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or if the President is absent, the most senior Vice President, or, in the absence of any such officer, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting. ARTICLE V OFFICERS Section 27. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the Controller, all of whom shall be elected at the annual organizational meeting of the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of Directors. Section 28. Tenure And Duties Of Officers. (a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. (b) Duties Of Chairman Of The Board Of Directors. The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. If there is no President, then the Chairman of the Board of Directors shall also serve as the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in paragraph (c) of this Section 28. 11

(c) Duties Of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. Unless some other officer has been elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. (d) Duties Of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (e) Duties Of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these By-laws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties given him in these By-laws and other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (f) Duties Of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. Section 29. Delegation Of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof. 12

Section 30. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer. Section 31. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors. ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION Section 32. Execution Of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these By-laws, and such execution or signature shall be binding upon the corporation. Unless otherwise specifically determined by the Board of Directors or otherwise required by law, promissory notes, deeds of trust, mortgages and other evidences of indebtedness of the corporation, and other corporate instruments or documents requiring the corporate seal, and certificates of shares of stock owned by the corporation, shall be executed, signed or endorsed by the Chairman of the Board of Directors, or the President or any Vice President, and by the Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All other instruments and documents requiring the corporate signature, but not requiring the corporate seal, may be executed as aforesaid or in such other manner as may be directed by the Board of Directors. All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do. Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. Section 33. Voting Of Securities Owned By The Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in 13

any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President. ARTICLE VII SHARES OF STOCK Section 34. Form And Execution Of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect to this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical. Section 35. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. 14

Section 36. Transfers. (a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares. (b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. Section 37. Fixing Record Dates. (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 38. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 15

ARTICLE VIII OTHER SECURITIES OF THE CORPORATION Section 39. Execution Of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 34), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation. ARTICLE IX DIVIDENDS Section 40. Declaration Of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Section 41. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. 16

ARTICLE X FISCAL YEAR Section 42. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. ARTICLE XI INDEMNIFICATION Section 43. Indemnification Of Directors, Executive Officers, Other Officers, Employees And Other Agents. (a) Directors And Executive Officers. The corporation shall indemnify its directors and executive officers (for the purposes of this Article XI, executive officers shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent not prohibited by the Delaware General Corporation Law; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and, provided, further, that the corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the Delaware General Corporation Law or (iv) such indemnification is required to be made under subsection (d). (b) Other Officers, Employees and Other Agents. The corporation shall have power to indemnify its other officers, employees and other agents as set forth in the Delaware General Corporation Law. (c) Expenses. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer, of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under this By-law or otherwise. Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this By-law, no advance shall be made by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, 17

whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation. (d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this By-law shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted by this By-law to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this Article XI or otherwise shall be on the corporation. (e) Non-Exclusivity Of Rights. The rights conferred on any person by this By-law shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized 18

to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the Delaware General Corporation Law. (f) Survival Of Rights. The rights conferred on any person by this By-law shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (g) Insurance. To the fullest extent permitted by the Delaware General Corporation Law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this By-law. (h) Amendments. Any repeal or modification of this By-law shall only be prospective and shall not affect the rights under this By-law in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation. (i) Saving Clause. If this By-law or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this By-law that shall not have been invalidated, or by any other applicable law. (j) Certain Definitions. For the purposes of this By-law, the following definitions shall apply: (1) The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative. (2) The term "expenses" shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding. (3) The term the "corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this By-law with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 19

(4) References to a "director," "executive officer," "officer," "employee," or "agent" of the corporation shall include, without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise. (5) References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this By-law. ARTICLE XII NOTICES Section 44. Notices. (a) Notice To Stockholders. Whenever, under any provisions of these By-laws, notice is required to be given to any stockholder, it shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the corporation or its transfer agent. (b) Notice To Directors. Any notice required to be given to any director may be given by the method stated in subsection (a), or by facsimile, telex or telegram, except that such notice other than one which is delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director. (c) Affidavit Of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained. (d) Time Notices Deemed Given. All notices given by mail, as above provided, shall be deemed to have been given as at the time of mailing, and all notices given by facsimile, telex or telegram shall be deemed to have been given as of the sending time recorded at time of transmission. 20

(e) Methods Of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. (f) Failure To Receive Notice. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him in the manner above provided, shall not be affected or extended in any manner by the failure of such stockholder or such director to receive such notice. (g) Notice To Person With Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or By-laws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. (h) Notice To Person With Undeliverable Address. Whenever notice is required to be given, under any provision of law or the Certificate of Incorporation or By-laws of the corporation, to any stockholder to whom (i) notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelve-month period, have been mailed addressed to such person at his address as shown on the records of the corporation and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the corporation a written notice setting forth his then current address, the requirement that notice be given to such person shall be reinstated. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to this paragraph. ARTICLE XIII AMENDMENTS Section 45. Amendments. Subject to paragraph (h) of Section 43 of the By-laws, the By-laws may be altered or amended or new By-laws adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding 21

shares of the Voting Stock. The Board of Directors shall also have the power to adopt, amend, or repeal By-laws. ARTICLE XIV LOANS TO OFFICERS Section 46. Loans To Officers. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these By-laws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 22

Exhibit 10.1 INDEMNITY AGREEMENT THIS AGREEMENT is made and entered into this ____ day of _____________, 1997 by and between GENE LOGIC INC., a Delaware corporation (the "Company"), and ______________ ("Agent"). RECITALS WHEREAS, Agent performs a valuable service to the Company in Agent's capacity as an officer or director of the Company; WHEREAS, the stockholders of the Company have adopted by-laws (the "By-laws") providing for the indemnification of the directors, officers, employees and other agents of the Company, including persons serving at the request of the Company in such capacities with other corporations or enterprises, as authorized by the Delaware General Corporation Law, as amended (the "Code"); WHEREAS, the By-laws and the Code, by their non-exclusive nature, permit contracts between the Company and its agents, officers, employees and other agents with respect to indemnification of such persons; and WHEREAS, in order to induce Agent to continue to serve as an officer or director of the Company, the Company has determined and agreed to enter into this Agreement with Agent; NOW, THEREFORE, in consideration of Agent's continued service as an officer or director after the date hereof, the parties hereto agree as follows: AGREEMENT 1. Services to the Company. Agent will serve, at the will of the Company or under separate contract, if any such contract exists, as an officer or director of the Company or as a director, officer or other fiduciary of an affiliate of the Company (including any employee benefit plan of the Company) faithfully and to the best of Agent's ability so long as Agent is duly elected and qualified in accordance with the provisions of the By-laws or other applicable charter documents of the Company or such affiliate; provided, however, that Agent may at any time and for any reason resign from such position (subject to any contractual obligation that Agent may have assumed apart from this Agreement) and that the Company or any affiliate shall have no obligation under this Agreement to continue Agent in any such position. 1.

2. Indemnity of Agent. The Company hereby agrees to hold harmless and indemnify Agent to the fullest extent authorized or permitted by the provisions of the By-laws and the Code, as the same may be amended from time to time (but, only to the extent that such amendment permits the Company to provide broader indemnification rights than the By-laws or the Code permitted prior to adoption of such amendment). 3. Additional Indemnity. In addition to and not in limitation of the indemnification otherwise provided for herein, and subject only to the exclusions set forth in Section 4 hereof, the Company hereby further agrees to hold harmless and indemnify Agent: (a) against any and all expenses (including attorneys' fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay because of any claim or claims made against or by Agent in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative (including an action by or in the right of the Company) to which Agent is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Agent is, was or at any time becomes a director, officer, employee or other agent of Company, or is or was serving or at any time serves at the request of the Company as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; and (b) otherwise to the fullest extent as may be provided to Agent by the Company under the non-exclusivity provisions of the Code and Section 43 of the By-laws. 4. Limitations on Additional Indemnity. No indemnity pursuant to Section 3 hereof shall be paid by the Company: (a) on account of any claim against Agent for an accounting of profits made from the purchase or sale by Agent of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law; (b) on account of Agent's conduct that was knowingly fraudulent or deliberately dishonest or that constituted willful misconduct; (c) on account of Agent's conduct that constituted a breach of Agent's duty of loyalty to the Company or resulted in any personal profit or advantage to which Agent was not legally entitled; 2.

(d) for which payment is actually made to Agent under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, by-law or agreement, except in respect of any excess beyond payment under such insurance, clause, by-law or agreement; (e) if indemnification is not lawful (and, in this respect, both the Company and Agent have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication); or (f) in connection with any proceeding (or part thereof) initiated by Agent, or any proceeding by Agent against the Company or its directors, officers, employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the Company, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the Code, or (iv) the proceeding is initiated pursuant to Section 9 hereof. 5. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Agent is a director, officer, employee or other agent of the Company (or is or was serving at the request of the Company as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as Agent shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Agent was serving in the capacity referred to herein. 6. Partial Indemnification. Agent shall be entitled under this Agreement to indemnification by the Company for a portion of the expenses (including attorneys' fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay in connection with any action, suit or proceeding referred to in Section 3 hereof even if not entitled hereunder to indemnification for the total amount thereof, and the Company shall indemnify Agent for the portion thereof to which Agent is entitled. 7. Notification and Defense of Claim. Not later than thirty (30) days after receipt by Agent of notice of the commencement of any action, suit or proceeding, Agent will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission to so notify the Company will not relieve it from any liability which it may have to Agent 3.

otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Agent notifies the Company of the commencement thereof: (a) the Company will be entitled to participate therein at its own expense; (b) except as otherwise provided below, the Company may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Agent. After notice from the Company to Agent of its election to assume the defense thereof, the Company will not be liable to Agent under this Agreement for any legal or other expenses subsequently incurred by Agent in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided below. Agent shall have the right to employ separate counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Agent unless (i) the employment of counsel by Agent has been authorized by the Company, (ii) Agent shall have reasonably concluded that there may be a conflict of interest between the Company and Agent in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of Agent's separate counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which Agent shall have made the conclusion provided for in clause (ii) above; and (c) the Company shall not be liable to indemnify Agent under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent, which shall not be unreasonably withheld. The Company shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Agent without Agent's written consent, which may be given or withheld in Agent's sole discretion. 8. Expenses. The Company shall advance, prior to the final disposition of any proceeding, promptly following request therefor, all expenses incurred by Agent in connection with such proceeding upon receipt of an undertaking by or on behalf of Agent to repay said amounts if it shall be determined ultimately that Agent is not entitled to be indemnified under the provisions of this Agreement, the By-laws, the Code or otherwise. 9. Enforcement. Any right to indemnification or advances granted by this Agreement to Agent shall be enforceable by or on behalf of Agent in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request 4.

therefor. Agent, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting Agent's claim. It shall be a defense to any action for which a claim for indemnification is made under Section 3 hereof (other than an action brought to enforce a claim for expenses pursuant to Section 8 hereof, provided that the required undertaking has been tendered to the Company) that Agent is not entitled to indemnification because of the limitations set forth in Section 4 hereof. Neither the failure of the Company (including its Board of Directors or its stockholders) to have made a determination prior to the commencement of such enforcement action that indemnification of Agent is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors or its stockholders) that such indemnification is improper shall be a defense to the action or create a presumption that Agent is not entitled to indemnification under this Agreement or otherwise. 10. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Agent, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights. 11. Non-Exclusivity of Rights. The rights conferred on Agent by this Agreement shall not be exclusive of any other right which Agent may have or hereafter acquire under any statute, provision of the Company's Certificate of Incorporation or By-laws, agreement, vote of stockholders or directors, or otherwise, both as to action in Agent's official capacity and as to action in another capacity while holding office. 12. Survival of Rights. (a) The rights conferred on Agent by this Agreement shall continue after Agent has ceased to be a director, officer, employee or other agent of the Company or to serve at the request of the Company as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of Agent's heirs, executors and administrators. (b) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. 13. Separability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid for any reason, such invalidity or unenforceability shall not affect the 5.

validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated in its entirety on any ground, then the Company shall nevertheless indemnify Agent to the fullest extent provided by the By-laws, the Code or any other applicable law. 14. Entire Agreement. This Agreement and the agreements referenced herein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements existing between the parties hereto pertaining to the subject matters hereof are superseded and expressly canceled. 15. Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware. 16. Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. 17. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement. 18. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 19. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to the party to whom such communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid: (a) If to Agent, at the address indicated on the signature page hereof. (b) If to the Company, to GENE LOGIC INC. 10150 Old Columbia Road Columbia, MD 21046 or to such other address as may have been furnished to Agent by the Company. 6.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. GENE LOGIC INC. By: Name: Title: AGENT

Address:

INDEMNITY AGREEMENT

Exhibit 10.2 GENE LOGIC INC. 1997 EQUITY INCENTIVE PLAN Adopted October 1, 1997 Approved By Stockholders ______________, 1997 INTRODUCTION. This Plan is an amendment and restatement of the Company's existing 1996 Stock Plan (the "1996 Plan"), and shall become effective on the date of the initial public offering (the "IPO") of the Company's common stock (the "Effective Date"). No options shall be granted under the 1996 Plan from and after the Effective Date. 1. PURPOSES. (a) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company and its Affiliates may be given an opportunity to benefit from increases in value of the common stock of the Company ("Common Stock") through the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to purchase restricted stock, all as defined below. (b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees, Directors or Consultants, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (c) The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof, including Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to purchase restricted stock granted pursuant to Section 7 hereof. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option. 2. DEFINITIONS. (a) "Affiliate" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. (b) "Board" means the Board of Directors of the Company. 1.

(c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. (e) "Company" means Gene Logic Inc., a Delaware corporation. (f) "Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors. (g) "Continuous Service" means the employment or relationship as a Director or Consultant is not interrupted or terminated. The Board, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors. (h) "Director" means a member of the Board. (i) "Employee" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (j) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (k) "Fair Market Value" means, as of any date, the value of the Common Stock of the Company determined as follows: (1) If the Common Stock is listed on any established stock exchange, or traded on the Nasdaq National Market or The Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in Common Stock) on the last market trading day prior to determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; (2) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board. (l) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 2.

(m) "Listing Date" means the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange, or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968. (n) "Non-Employee Director" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act of 1933 ("Regulation S-K"), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. (o) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (p) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (q) "Option" means a stock option granted pursuant to the Plan. (r) "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. (s) "Optionee" means a person to whom an Option is granted pursuant to the Plan. (t) "Outside Director" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. (u) "Plan" means this 1997 Equity Incentive Plan. 3.

(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. (w) "Stock Award" means any right granted under the Plan, including any Option, any stock bonus, and any right to purchase restricted stock. (x) "Stock Award Agreement" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 3. ADMINISTRATION. (a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (1) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock, or a combination of the foregoing; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; and the number of shares with respect to which a Stock Award shall be granted to each such person. (2) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (3) To amend the Plan or a Stock Award as provided in Section 12. (4) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan. (c) The Board may delegate administration of the Plan to a committee or committees ("Committee") of two or more members of the Board. In the discretion of the Board, a Committee may consist solely of two (2) or more Outside Directors, in accordance with Code Section 162(m), or solely of two (2) or more Non-Employee Directors, in accordance with Rule 16b-3. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and 4.

references in this Plan to the Board shall thereafter be to the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 4. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 11 relating to adjustments upon changes in stock, the stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate Six Million One Hundred Thousand (6,100,000) shares of Common Stock. Such share reserve shall consist of (i) the options granted under the 1996 Plan which are outstanding as of the Effective Date plus (ii) the shares available for grant under the 1996 Plan as of the Effective Date plus (iii) an additional Three Million (3,000,000) shares of common stock. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5. ELIGIBILITY. (a) Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted only to Employees, Directors or Consultants. (b) No person shall be eligible for the grant of an Incentive Stock Option if, at the time of grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant. (c) Subject to the provisions of Section 11 relating to adjustments upon changes in stock, no person shall be eligible to be granted Stock Awards covering more than seven hundred thousand (700,000) shares of Common Stock in any calendar year. 6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions: 5.

(a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted. (b) Price. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted, and the exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or Committee, at the time of the grant of the Option, (A) by delivery to the Company of other Common Stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other Common Stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. In addition, the "par value" of stock acquired under an Option may not be paid pursuant to a deferred compensation arrangement. (d) Transferability. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by such person. A Nonstatutory Stock Option may be transferred to the extent provided in the Option Agreement; provided that if the Option Agreement does not expressly permit transfer, then such Nonstatutory Stock Option shall not be transferable except by will, by the laws of descent and distribution or pursuant to a domestic relations order satisfying the requirements of Rule 16b-3, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person or any transferee pursuant to a domestic relations order. Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (e) Vesting. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that 6.

period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised. (f) Termination of Continued Service. In the event an Optionee's Continuous Service terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option within such period of time designated by the Board, which shall in no event be later than the expiration of the term of the Option as set forth in the Option Agreement (the "Post-Termination Exercise Period") and only to the extent that the Optionee was entitled to exercise the Option on the date Optionee's Continuous Service terminates. In the case of an Incentive Stock Option, the Board shall determine the Post-Termination Exercise Period at the time the Option is granted, and the term of such Post-Termination Exercise Period shall in no event exceed three (3) months from the date of termination. In addition, the Board may at any time, with the consent of the Optionee, extend the Post-Termination Exercise Period and provide for continued vesting; provided however, that any extension of such period by the Board in excess of three (3) months from the date of termination shall cause an Incentive Stock Option so extended to become a Nonstatutory Stock Option, effective as of the date of Board action. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement or as otherwise determined above, the Option shall terminate, and the shares covered by such Option shall revert to the Plan. Notwithstanding the foregoing, the Board shall have the power to permit an Option to continue to vest during the Post-Termination Exercise Period. (g) Disability of Optionee. In the event an Optionee's Continuous Service terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (h) Death of Optionee. In the event of the death of an Optionee during, or within a three (3)-month period after the termination of, the Optionee's Continuous Service, the Option may be exercised to the extent vested by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the 7.

option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (i) Early Exercise. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option. Any unvested shares so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. 7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK. Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or Committee shall deem appropriate. The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each stock bonus or restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions as appropriate: (a) Purchase Price. The purchase price under each restricted stock purchase agreement shall be such amount as the Board or Committee shall determine and designate in such agreement, but in no event shall the purchase price be less than eighty-five percent (85%) of the stock's Fair Market Value on the date such award is made. Notwithstanding the foregoing, the Board or Committee may determine that eligible participants in the Plan may be awarded stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company for its benefit. (b) Transferability. No rights under a stock bonus or restricted stock purchase agreement shall be transferable except by will or the laws of descent and distribution or, if the agreement so provides, pursuant to a domestic relations order satisfying the requirements of Rule 16b-3, so long as stock awarded under such agreement remains subject to any restrictions pursuant to the agreement. (c) Consideration. The purchase price of stock acquired pursuant to a stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or Committee, according to a deferred payment or other arrangement with the person to whom the stock is sold; or (iii) in any other form of legal consideration that may be acceptable 8.

to the Board or Committee in its discretion. Notwithstanding the foregoing, the Board or Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit. (d) Vesting. Shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or Committee. (e) Termination of Continuous Service. In the event a Participant's Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the stock bonus or restricted stock purchase agreement between the Company and such person. 8. COVENANTS OF THE COMPANY. (a) During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of stock required to satisfy such Stock Awards. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares under Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act of 1933, as amended (the "Securities Act") either the Plan, any Stock Award or any stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Stock Awards unless and until such authority is obtained. 9. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the Company. 10. MISCELLANEOUS. (a) The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest. 9.

(b) Neither an Employee, Director nor a Consultant nor any person to whom a Stock Award is transferred in accordance with the Plan shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms. (c) Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Employee, Consultant or other holder of Stock Awards any right to continue in the employ of the Company or any Affiliate, or to continue serving as a Consultant and Director, or shall affect the right of the Company or any Affiliate to terminate the employment of any Employee with or without notice and with or without cause, the right to terminate the relationship of any Consultant pursuant to the terms of such Consultant's agreement with the Company or Affiliate or service as a Director pursuant to the Company's By-Laws. (d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. (e) The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred in accordance with the Plan, as a condition of exercising or acquiring stock under any Stock Award, (1) to give written assurances satisfactory to the Company as to such person's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Stock Award for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition of stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (f) To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation 10.

relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the Common Stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (3) delivering to the Company owned and unencumbered shares of the Common Stock of the Company. 11. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the maximum number of shares subject to award to any person during any calendar year, and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of shares and price per share of stock subject to such outstanding Stock Awards. Such adjustments shall be made by the Board or Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") (b) In the event of a Change in Control, (i) any surviving or acquiring corporation shall assume Stock Awards outstanding under the Plan or shall substitute similar Stock Awards for those outstanding under the Plan, or (ii) in the event any surviving or acquiring corporation refuses to assume such Stock Awards or to substitute similar Stock Awards for those outstanding under the Plan, (A) with respect to Stock Awards held by persons then performing services as Employees, Directors or Consultants, the vesting of such Stock Awards and the time during which such Stock Awards may be exercised shall be accelerated prior to such event and the Stock Awards terminated if not exercised after such acceleration and at or prior to such event, and (B) with respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall be terminated if not exercised prior to such event. In addition, with respect to any person who was providing services as an Employee, Director or Consultant immediately prior to the consummation of the Change in Control, any Stock Awards held by such persons shall immediately become fully vested and exercisable, and any repurchase right by the Company with respect to shares acquired by such person under a Stock Award shall lapse, if such person's Continuous Service is terminated other than for Cause within twelve (12) months following consummation of the Change in Control. For purposes of the Plan, "Cause" shall mean willful conduct that is materially injurious to the Company (or any Affiliate) or any successor thereto, whether financial or otherwise. 11.

For purposes of this Plan, "Change in Control" means: (1) a dissolution, liquidation, or sale of all or substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common shares outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors. 12. AMENDMENT OF THE PLAN AND STOCK AWARDS. (a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements. (b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Directors or Consultants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. (d) Rights and obligations under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. (e) The Board at any time, and from time to time, may amend the terms of any one or more Stock Award; provided, however, that the rights and obligations under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. 12.

13. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any Stock Award granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the consent of the person to whom the Stock Award was granted. 14. STOCKHOLDER APPROVAL. No Stock Awards granted under the Plan shall be exercisable in whole or part unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 13.

Exhibit 10.3 GENE LOGIC INC. 1997 EQUITY INCENTIVE PLAN STOCK OPTION AGREEMENT Pursuant to the Grant Notice and this Stock Option Agreement, the Company has granted you an option to purchase the number of shares of the Company's common stock ("Common Stock") indicated in the Grant Notice at the exercise price indicated in the Grant Notice. Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. The details of your option are as follows: 1. VESTING. Subject to the limitations contained herein, your option will vest as provided in the Grant Notice, provided that vesting will cease upon the termination of your Continuous Service. 2. METHOD OF PAYMENT. (a) Payment Options. Payment of the exercise price by cash or check is due in full upon exercise of all or any part of your option, provided that you may elect, to the extent permitted by applicable law and the Grant Notice, to make payment of the exercise price under one of the following alternatives: (i) Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; (ii) Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or (iii) Payment by a combination of the above methods. 3. WHOLE SHARES. Your option may only be exercised for whole shares. 4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, your option may not be exercised unless the shares issuable upon exercise of your option are then registered under the Securities Act or, if such shares are not then so

registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. 5. TERM. The term of your option commences on the Date of Grant and expires upon the earliest of: (i) the Expiration Date indicated in the Grant Notice; (ii) the tenth (10th) anniversary of the Date of Grant; (iii) eighteen (18) months after your death, if you die during, or within three (3) months after the termination of your Continuous Service; (iv) twelve (12) months after the termination of your Continuous Service due to disability; (v) the termination of your Continuous Service for Cause; or (vi) three (3) months after the termination of your Continuous Service for any other reason, provided that if during any part of such three (3)-month period the option is not exercisable solely because of the condition set forth in paragraph 4 (Securities Law Compliance), in which event the option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of Continuous Service. For these purposes, "Cause" shall mean willful conduct that is materially injurious to the Company (or any Affiliate) or any successor thereto, whether financial or otherwise. To obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times beginning on the grant date of the option and ending on the day three (3) months before the date of the option's exercise, you must be an employee of the Company, except in the event of your death or permanent and total disability. The Company cannot guarantee that your option will be treated as an "incentive stock option" if you exercise your option more than three (3) months after the date your employment with the Company terminates. 6. EXERCISE. (a) You may exercise the vested portion of your option during its term (and the unvested portion of your option if the Grant Notice so permits) by delivering a Notice of Exercise (in the form attached to your Grant Notice or other form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require. 2.

(b) By exercising your option you agree that: (i) as a condition to any exercise of your option, the Company may require you to enter an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise; (ii) you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of an incentive stock option that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option; and (iii) the Company (or a representative of the underwriters) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Act, require that you not sell or otherwise transfer or dispose of any shares of Common Stock or other securities of the Company during such period (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act as may be requested by the Company or the representative of the underwriters. You further agree that the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period. 7. TRANSFERABILITY. Your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option. 8. OPTION NOT A SERVICE CONTRACT. Your option is not an employment contract and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in your option shall obligate the Company, its shareholders, Board of Directors, officers or employees to continue any relationship which you might have as a Director or Consultant for the Company. 9. NOTICES. Any notices provided for in your option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. 3.

10. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, including without limitation the provisions of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 4.

Exhibit 10.4 GENE LOGIC INC. 1997 EQUITY INCENTIVE PLAN STOCK OPTION GRANT NOTICE Gene Logic Inc. (the "Company"), pursuant to its 1997 Equity Incentive Plan (the "Plan"), hereby grants to Optionee an option to purchase the number of shares of the Company's common stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in Attachments I, II and III, which are incorporated herein in their entirety.
Optionee: Date of Grant: Vesting Commencement Date: Shares Subject to Option: Exercise Price Per Share: Expiration Date: ____ Incentive Stock Option _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ ____ Nonstatutory Stock Option

Exercise/Vesting Schedule:

[25% of the option shares shall vest on the one (1)-year anniversary of the Vesting Commencement Date, the remaining shares shall vest in 36 equal monthly installments thereafter.]

Payment: Any or a combination of the following: (i) by cash or check, (ii) pursuant to a Regulation T program, as set forth in the Stock Option Agreement or (iii) delivering shares of previously-owned common stock, as set forth in the Stock Option Agreement. Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt of, and understands and agrees to, this Grant Notice, the Stock Option Agreement and the Plan. Optionee further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between Optionee and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionee under the Plan, and (ii) the following agreements only:
Other Agreements: __________________________________ __________________________________ GENE LOGIC INC. By:_______________________ Title:____________________ Date:_____________________ OPTIONEE: _____________________________ Signature Date:________________________

Attachment I: Stock Option Agreement Attachment II: 1997 Equity Incentive Plan Attachment III: Notice of Exercise

Exhibit 10.5 GENE LOGIC INC. EMPLOYEE STOCK PURCHASE PLAN Adopted October 1, 1997 Approved by the Stockholders on _____________, 1997 1. PURPOSE. (a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to provide a means by which employees of Gene Logic Inc., a Delaware corporation (the "Company"), and its Affiliates, as defined in subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be given an opportunity to purchase stock of the Company. (b) The word "Affiliate" as used in the Plan means any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended (the "Code"). (c) The Company, by means of the Plan, seeks to retain the services of its employees, to secure and retain the services of new employees, and to provide incentives for such persons to exert maximum efforts for the success of the Company. (d) The Company intends that the rights to purchase stock of the Company granted under the Plan be considered options issued under an "employee stock purchase plan" as that term is defined in Section 423(b) of the Code. 2. ADMINISTRATION. (a) The Plan shall be administered by the Board of Directors (the "Board") of the Company unless and until the Board delegates administration to a Committee, as provided in subparagraph 2(c). Whether or not the Board has delegated administration, the Board shall have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan. (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To determine when and how rights to purchase stock of the Company shall be granted and the provisions of each offering of such rights (which need not be identical). (ii) To designate from time to time which Affiliates of the Company shall be eligible to participate in the Plan. (iii) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the 1.

exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (iv) To amend the Plan as provided in paragraph 13. (v) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and its Affiliates and to carry out the intent that the Plan be treated as an "employee stock purchase plan" within the meaning of Section 423 of the Code. (c) The Board may delegate administration of the Plan to a Committee composed of two (2) or more members of the Board (the "Committee"). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 3. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of paragraph 12 relating to adjustments upon changes in stock, the stock that may be sold pursuant to rights granted under the Plan shall not exceed in the aggregate [two hundred fifty thousand (250,000)] shares of the Company's common stock (the "Common Stock"). If any right granted under the Plan shall for any reason terminate without having been exercised, the Common Stock not purchased under such right shall again become available for the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 4. GRANT OF RIGHTS; OFFERING. (a) The Board or the Committee may from time to time grant or provide for the grant of rights to purchase Common Stock of the Company under the Plan to eligible employees (an "Offering") on a date or dates (the "Offering Date(s)") selected by the Board or the Committee. Each Offering shall be in such form and shall contain such terms and conditions as the Board or the Committee shall deem appropriate, which shall comply with the requirements of Section 423(b)(5) of the Code that all employees granted rights to purchase stock under the Plan shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering shall include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering shall be effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the substance of the provisions contained in paragraphs 5 through 8, inclusive. 2.

(b) If an employee has more than one right outstanding under the Plan, unless he or she otherwise indicates in agreements or notices delivered hereunder: (1) each agreement or notice delivered by that employee will be deemed to apply to all of his or her rights under the Plan, and (2) a right with a lower exercise price (or an earlier-granted right, if two rights have identical exercise prices), will be exercised to the fullest possible extent before a right with a higher exercise price (or a later-granted right, if two rights have identical exercise prices) will be exercised. 5. ELIGIBILITY. (a) Rights may be granted only to employees of the Company or, as the Board or the Committee may designate as provided in subparagraph 2(b), to employees of any Affiliate of the Company. Except as provided in subparagraph 5(b), an employee of the Company or any Affiliate shall not be eligible to be granted rights under the Plan, unless, on the Offering Date, such employee has been in the employ of the Company or any Affiliate for such continuous period preceding such grant as the Board or the Committee may require, but in no event shall the required period of continuous employment be equal to or greater than two (2) years. In addition, unless otherwise determined by the Board or the Committee and set forth in the terms of the applicable Offering, no employee of the Company or any Affiliate shall be eligible to be granted rights under the Plan, unless, on the Offering Date, such employee's customary employment with the Company or such Affiliate is for at least twenty (20) hours per week and at least five (5) months per calendar year. (b) The Board or the Committee may provide that each person who, during the course of an Offering, first becomes an eligible employee of the Company or designated Affiliate will, on a date or dates specified in the Offering which coincides with the day on which such person becomes an eligible employee or occurs thereafter, receive a right under that Offering, which right shall thereafter be deemed to be a part of that Offering. Such right shall have the same characteristics as any rights originally granted under that Offering, as described herein, except that: (i) the date on which such right is granted shall be the "Offering Date" of such right for all purposes, including determination of the exercise price of such right; (ii) the period of the Offering with respect to such right shall begin on its Offering Date and end coincident with the end of such Offering; and (iii) the Board or the Committee may provide that if such person first becomes an eligible employee within a specified period of time before the end of the Offering, he or she will not receive any right under that Offering. (c) No employee shall be eligible for the grant of any rights under the Plan if, immediately after any such rights are granted, such employee owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Affiliate. For purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in determining the stock ownership of any employee, and stock 3.

which such employee may purchase under all outstanding rights and options shall be treated as stock owned by such employee. (d) An eligible employee may be granted rights under the Plan only if such rights, together with any other rights granted under "employee stock purchase plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of the Code, do not permit such employee's rights to purchase stock of the Company or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) of fair market value of such stock (determined at the time such rights are granted) for each calendar year in which such rights are outstanding at any time. (e) Officers of the Company and any designated Affiliate shall be eligible to participate in Offerings under the Plan, provided, however, that the Board may provide in an Offering that certain employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate. 6. RIGHTS; PURCHASE PRICE. (a) On each Offering Date, each eligible employee, pursuant to an Offering made under the Plan, shall be granted the right to purchase up to the number of shares of Common Stock of the Company purchasable with a percentage designated by the Board or the Committee not exceeding fifteen percent (15%) of such employee's Earnings (as defined in subparagraph 7(a)) during the period which begins on the Offering Date (or such later date as the Board or the Committee determines for a particular Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering. The Board or the Committee shall establish one or more dates during an Offering (the "Purchase Date(s)") on which rights granted under the Plan shall be exercised and purchases of Common Stock carried out in accordance with such Offering. (b) In connection with each Offering made under the Plan, the Board or the Committee may specify a maximum number of shares that may be purchased by any employee as well as a maximum aggregate number of shares that may be purchased by all eligible employees pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Board or the Committee may specify a maximum aggregate number of shares which may be purchased by all eligible employees on any given Purchase Date under the Offering. If the aggregate purchase of shares upon exercise of rights granted under the Offering would exceed any such maximum aggregate number, the Board or the Committee shall make a pro rata allocation of the shares available in as nearly a uniform manner as shall be practicable and as it shall deem to be equitable. (c) The purchase price of stock acquired pursuant to rights granted under the Plan shall be not less than the lesser of: (i) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the Offering Date; or 4.

(ii) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the Purchase Date. 7. PARTICIPATION; WITHDRAWAL; TERMINATION. (a) An eligible employee may become a participant in the Plan pursuant to an Offering by delivering a participation agreement to the Company within the time specified in the Offering, in such form as the Company provides. Each such agreement shall authorize payroll deductions of up to the maximum percentage specified by the Board or the Committee of such employee's Earnings during the Offering. "Earnings" is defined as an employee's regular salary or wages (including amounts thereof elected to be deferred by the employee, that would otherwise have been paid, under any arrangement established by the Company intended to comply with Section 401(k), Section 402(e)(3), Section 125, Section 402(h), or Section 403(b) of the Code, and also including any deferrals under a non-qualified deferred compensation plan or arrangement established by the Company), any may also include or exclude (as provided for each Offering) the following items of compensation: bonuses, commissions, overtime pay, incentive pay, profit sharing, other remuneration paid directly to the employee, the cost of employee benefits paid for by the Company or an Affiliate, education or tuition reimbursements, imputed income arising under any group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income received in connection with stock options, contributions made by the Company or an Affiliate under any employee benefit plan, and similar items of compensation, as determined by the Board or Committee. The payroll deductions made for each participant shall be credited to an account for such participant under the Plan and shall be deposited with the general funds of the Company. A participant may reduce (including to zero) or increase such payroll deductions, and an eligible employee may begin such payroll deductions, after the beginning of any Offering only as provided for in the Offering. A participant may make additional payments into his or her account only if specifically provided for in the Offering and only if the participant has not had the maximum amount withheld during the Offering. (b) At any time during an Offering, a participant may terminate his or her payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Company provides. Such withdrawal may be elected at any time prior to the end of the Offering except as provided by the Board or the Committee in the Offering. Upon such withdrawal from the Offering by a participant, the Company shall distribute to such participant all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire stock for the participant) under the Offering, without interest, and such participant's interest in that Offering shall be automatically terminated. A participant's withdrawal from an Offering will have no effect upon such participant's eligibility to participate in any other Offerings under the Plan but such participant will be required to deliver a new participation agreement in order to participate in subsequent Offerings under the Plan. (c) Rights granted pursuant to any Offering under the Plan shall terminate immediately upon cessation of a participant's employment with the Company and any designated Affiliate, for any reason, and the Company shall distribute to such terminated employee all of 5.

his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire stock for the terminated employee), under the Offering, without interest. (d) Rights granted under the Plan shall not be transferable by a participant otherwise than by will or the laws of descent and distribution, or by a beneficiary designation as provided in paragraph 14 and, otherwise during his or her lifetime, shall be exercisable only by the person to whom such rights are granted. 8. EXERCISE. (a) On each Purchase Date specified in the relevant Offering, each participant's accumulated payroll deductions and other additional payments specifically provided for in the Offering (without any increase for interest) will be applied to the purchase of whole shares of stock of the Company, up to the maximum number of shares permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares shall be issued upon the exercise of rights granted under the Plan, unless the Offering document specifically provides otherwise. The amount, if any, of accumulated payroll deductions remaining in each participant's account after the purchase of shares which is less than the amount required to purchase one share of stock on the final Purchase Date of an Offering shall be held in each such participant's account for the purchase of shares under the next Offering under the Plan, unless such participant withdraws from such next Offering, as provided in subparagraph 7(b), or is no longer eligible to be granted rights under the Plan, as provided in paragraph 5, in which case such amount shall be distributed to the participant after such final Purchase Date, without interest. The amount, if any, of accumulated payroll deductions remaining in any participant's account after the purchase of shares which is equal to the amount required to purchase whole shares of stock on the final Purchase Date of an Offering shall be distributed in full to the participant after such Purchase Date, without interest. (b) No rights granted under the Plan may be exercised to any extent unless the shares to be issued upon such exercise under the Plan (including rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act of 1933, as amended (the "Securities Act") and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not so registered or in such compliance, no rights granted under the Plan or any Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall not be delayed more than twelve (12) months and the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no rights granted under the Plan or any Offering shall be exercised and all payroll deductions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire stock) shall be distributed to the participants, without interest. 6.

9. COVENANTS OF THE COMPANY. (a) During the terms of the rights granted under the Plan, the Company shall keep available at all times the number of shares of stock required to satisfy such rights. (b) The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the rights granted under the Plan. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such rights unless and until such authority is obtained. 10. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to rights granted under the Plan shall constitute general funds of the Company. 11. RIGHTS AS A STOCKHOLDER. A participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to rights granted under the Plan unless and until the participant's shares acquired upon exercise of rights hereunder are recorded in the books of the Company. 12. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any rights granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan and outstanding rights will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and number of shares and price per share of stock subject to outstanding rights. Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") (b) In the event of: (1) a dissolution or liquidation of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company 7.

or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then, as determined by the Board in its sole discretion (i) any surviving or acquiring corporation may assume outstanding rights or substitute similar rights for those under the Plan, (ii) such rights may continue in full force and effect, or (iii) participants' accumulated payroll deductions may be used to purchase Common Stock immediately prior to the transaction described above and the participants' rights under the ongoing Offering terminated. 13. AMENDMENT OF THE PLAN. (a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in paragraph 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment if such amendment requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3 promulgated under the Exchange Act or any Nasdaq or securities exchange requirements. (b) The Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to employee stock purchase plans and/or to bring the Plan and/or rights granted under it into compliance therewith. (c) Rights and obligations under any rights granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan, except with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulations, or except as necessary to ensure that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code. 14. DESIGNATION OF BENEFICIARY. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to the end of an Offering but prior to delivery to the participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death during an Offering. (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of 8.

the Company), the Company, in its sole discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 15. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board in its discretion, may suspend or terminate the Plan at any time. No rights may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any rights granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code. 16. EFFECTIVE DATE OF PLAN. The Plan shall become effective upon the Company's initial public offering of shares of common stock (the "Effective Date"), but no rights granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board or the Committee, which date may be prior to the Effective Date. 9.

GENE LOGIC INC. EMPLOYEE STOCK PURCHASE PLAN OFFERING Adopted by the Board of Directors on October 1, 1997 1. Grant; Offering Date. (a) The Board of Directors (the "Board") of Gene Logic Inc. (the "Company"), pursuant to the Company's Employee Stock Purchase Plan (the "Plan"), hereby authorizes the grant of rights to purchase shares of the common stock of the Company ("Common Stock") to all Eligible Employees (an "Offering"). The first Offering shall begin on the effective date of the initial public offering of the Company's Common Stock and end on January 31, 2000 (the "Initial Offering"). Thereafter, an Offering shall begin on February 1 every two (2) years, beginning with calendar year 2000, and shall end on the day prior to the second anniversary of its Offering Date. The first day of an Offering is that Offering's "Offering Date." (b) Notwithstanding anything to the contrary, in the event that the fair market value of a share of Common Stock on any Purchase Date (as defined in Section 6 hereof) during an Offering is less than the fair market value of a share of Common Stock on the Offering Date of the Offering, then following the purchase of Common Stock on such Purchase Date (i) the Offering shall terminate, (ii) a new Offering shall commence on the day following the Purchase Date and shall end on the day prior to the second anniversary of such new Offering's Offering Date, and (iii) all participants in the just-terminated Offering shall automatically be enrolled in the new Offering. (c) Prior to the commencement of any Offering, the Board (or the Committee described in subparagraph 2(c) of the Plan, if any) may change any or all terms of such Offering and any subsequent Offerings. The granting of rights pursuant to each Offering hereunder shall occur on each respective Offering Date unless, prior to such date (a) the Board (or such Committee) determines that such Offering shall not occur, or (b) no shares remain available for issuance under the Plan in connection with the Offering. 2. Eligible Employees. (a) All employees of the Company and each of its Affiliates (as defined in the Plan) incorporated in the United States shall be granted rights to purchase Common Stock under each Offering on the Offering Date of such Offering, provided that each such employee otherwise meets the employment requirements of subparagraph 5(a) of the Plan (an "Eligible Employee"). Notwithstanding the foregoing, the following employees shall not be Eligible Employees or be granted rights under an Offering: (i) part-time or seasonal employees whose customary employment is less than twenty (20) hours per week or five (5) months per calendar year or (ii) 1.

5% stockholders (including ownership through unexercised and/or unvested stock options) described in subparagraph 5(c) of the Plan. (b) Each person who first becomes an Eligible Employee during any Offering and at least six (6) months prior to the final Purchase Date of the Offering will, on the next August 1 or February 1 during that Offering, receive a right under such Offering, which right shall thereafter be deemed to be a part of the Offering. Such right shall have the same characteristics as any rights originally granted under the Offering except that: (1) the date on which such right is granted shall be the "Offering Date" of such right for all purposes, including determination of the exercise price of such right; and (2) the Offering for such right shall begin on its Offering Date and end coincident with the end of the ongoing Offering. 3. Rights. (a) Subject to the limitations contained herein and in the Plan, on each Offering Date each Eligible Employee shall be granted the right to purchase the number of shares of Common Stock purchasable with up to fifteen percent (15%) of such employee's Earnings paid during the period of such Offering beginning after such Eligible Employee first commences participation; provided, however, that no employee may purchase Common Stock on a particular Purchase Date that would result in more than fifteen percent (15%) of such employee's Earnings in the period from the Offering Date to such Purchase Date having been applied to purchase shares under all ongoing Offerings under the Plan and all other plans of the Company intended to qualify as "employee stock purchase plans" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). For this Offering, "Earnings" means the base salary paid to an employee, including all amounts elected to be deferred by the employee, that would otherwise have been paid, under any cash or deferred arrangement established by the Company), but excluding overtime pay, commissions, bonuses, and other remuneration paid directly to the employee, profit sharing, the cost of employee benefits paid for by the Company, education or tuition reimbursements, imputed income arising under any Company group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income received in connection with stock options, contributions made by the Company under any employee benefit plan, and similar items of compensation. (b) Notwithstanding the foregoing, the maximum number of shares of Common Stock an Eligible Employee may purchase on any Purchase Date in an Offering shall be such number of shares as has a fair market value (determined as of the Offering Date for such Offering) equal to (x) $25,000 multiplied by the number of calendar years in which the right under such Offering has been outstanding at any time, minus (y) the fair market value of any other shares of Common Stock (determined as of the relevant Offering Date with respect to such shares) which, 2.

for purposes of the limitation of Section 423(b)(8) of the Code, are attributed to any of such calendar years in which the right is outstanding. The amount in clause (y) of the previous sentence shall be determined in accordance with regulations applicable under Section 423(b)(8) of the Code based on (i) the number of shares previously purchased with respect to such calendar years pursuant to such Offering or any other Offering under the Plan, or pursuant to any other Company plans intended to qualify as "employee stock purchase plans" under Section 423 of the Code, and (ii) the number of shares subject to other rights outstanding on the Offering Date for such Offering pursuant to the Plan or any other such Company plan. (c) The maximum aggregate number of shares available to be purchased by all Eligible Employees under an Offering shall be the number of shares remaining available under the Plan on the Offering Date. If the aggregate purchase of shares of Common Stock upon exercise of rights granted under the Offering would exceed the maximum aggregate number of shares available, the Board shall make a pro rata allocation of the shares available in a uniform and equitable manner. 4. Purchase Price. The purchase price of the Common Stock under the Offering shall be the lesser of: (i) eighty-five percent (85%) of the fair market value of the Common Stock on the Offering Date or (ii) or eighty-five percent (85%) of the fair market value of the Common Stock on the Purchase Date, in each case rounded up to the nearest whole cent per share. For the Initial Offering, the fair market value of the Common Stock at the time when the Offering commences shall be the price per share at which shares of Common Stock are first sold to the public in the Company's initial public offering as specified in the final prospectus with respect to that public offering. 5. Participation. (a) Except as otherwise provided in this paragraph 5 or in the Plan, an Eligible Employee may elect to participate in an Offering only at the beginning of the Offering or as of the day following a Purchase Date during such Offering. An Eligible Employee shall become a participant in an Offering by delivering an agreement authorizing payroll deductions. Such deductions must be in whole percentages of Earnings, with a minimum percentage of one percent (1%) and a maximum percentage of fifteen percent (15%). A participant may not make additional payments into his or her account. The agreement shall be made on such enrollment form as the Company provides, and must be delivered to the Company prior to the date participation is to be effective, unless a later time for filing the enrollment form is set by the Company for all Eligible Employees with respect to a given participation date. For the Initial Offering, the time for filing an enrollment form and commencing participation for individuals who are Eligible Employees on the Offering Date for the Initial Offering shall be determined by the Company and communicated to such Eligible Employees. 3.

(b) A participant may decrease his or her participation level during the course of a six (6)-month purchase interval one (1) time, and only by delivering notice to the Company at least ten (10) days in advance of the Purchase Date in such form as the Company prescribes; provided that a participant may (i) reduce his or her deductions to zero percent (0%) upon ten (10) days' prior notice by delivering a notice in such form as the Company provides, (ii) may increase or decrease his or her participation level at any time to become effective on the day following the next subsequent Purchase Date or (iii) may withdraw from an Offering and receive his or her accumulated payroll deductions from the Offering (reduced to the extent, if any, such deductions have been used to acquire Common Stock for the participant on any prior Purchase Dates) without interest, at any time prior to the end of the Offering, excluding only each ten (10)-day period immediately preceding a Purchase Date, by delivering a withdrawal notice to the Company in such form as the Company provides. A participant who has withdrawn from an Offering shall not again participate in such Offering, but may participant in subsequent Offerings under the Plan in accordance with the terms thereof. 6. Purchases. Subject to the limitations contained herein, on each Purchase Date, each participant's accumulated payroll deductions (without any increase for interest) shall be applied to the purchase of whole shares of Common Stock, up to the maximum number of shares permitted under the Plan and the Offering. "Purchase Date" shall be defined as each January 31 and July 31, except that the first Purchase Date under this Offering shall be July 31, 1998, and not January 31, 1998. 7. Notices and Agreements. Any notices or agreements provided for in an Offering or the Plan shall be given in writing, in a form provided by the Company, and unless specifically provided for in the Plan or this Offering, shall be deemed effectively given upon receipt or, in the case of notices and agreements delivered by the Company, five (5) days after deposit in the United States mail, postage prepaid. 8. Exercise Contingent on Stockholder Approval. The rights granted under an Offering are subject to the approval of the Plan by the stockholders as required for the Plan to obtain treatment as a tax-qualified employee stock purchase plan under Section 423 of the Code and to comply with the requirements of exemption from potential liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") set forth in Rule 16b-3 promulgated under the Exchange Act. 4.

9. Offering Subject to Plan. Each Offering is subject to all the provisions of the Plan, and its provisions are hereby made a part of the Offering, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of an Offering and those of the Plan (including interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan), the provisions of the Plan shall control. 5.

Exhibit 10.6 GENE LOGIC INC. 1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN Adopted on October 1, 1997 Approved by Stockholders on ______________, 1997 1. PURPOSE. (a) The purpose of the 1997 Non-Employee Directors' Stock Option Plan (the "Plan") is to provide a means by which each director of Gene Logic Inc. (the "Company") who is not otherwise at the time of grant an employee of or consultant to the Company or of any Affiliate of the Company (each such person being hereafter referred to as a "Non-Employee Director") will be given an opportunity to purchase stock of the Company. (b) The word "Affiliate" as used in the Plan means any parent corporation or subsidiary corporation of the Company as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). (c) The Company, by means of the Plan, seeks to retain the services of persons now serving as Non-Employee Directors of the Company, to secure and retain the services of persons capable of serving in such capacity, and to provide incentives for such persons to exert maximum efforts for the success of the Company. 2. ADMINISTRATION. (a) The Plan shall be administered by the Board of Directors of the Company (the "Board") unless and until the Board delegates administration to a committee, as provided in subparagraph 2(b). (b) The Board may delegate administration of the Plan to a committee composed of two (2) or more members of the Board (the "Committee"). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 3. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of paragraph 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to options granted under the Plan shall not exceed in the aggregate [one hundred twenty five thousand (125,000)] shares of the Company's common stock. If any option granted under the Plan shall for any reason expire or otherwise terminate without having been exercised in full, the stock not purchased under such option shall again become available for the Plan. 1.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 4. ELIGIBILITY. Options shall be granted only to Non-Employee Directors of the Company. 5. NON-DISCRETIONARY GRANTS. (a) Each person who is first elected or appointed to the Board as a Non-Employee Director after the Adoption Date shall automatically be granted, on the date of such initial election or appointment, an option to purchase thirty thousand (30,000) shares of common stock of the Company on the terms and conditions set forth herein (hereinafter, an "Initial Grant"). (b) Each Non-Employee Director who is re-elected at or after the [1998] annual meeting of stockholders, and who has continuously served as a Non-Employee Director for the six (6)-month period prior to the date of the such annual meeting of stockholders, shall automatically be granted, following such annual meeting, an option to purchase seven thousand five hundred (7,500) shares of common stock of the Company on the terms and conditions set forth herein (hereinafter, an "Annual Grant"). 6. OPTION PROVISIONS. Each option shall be subject to the following terms and conditions: (a) The term of each option commences on the date it is granted and, unless sooner terminated as set forth herein, expires on the date ("Expiration Date") ten (10) years from the date of grant. If the optionee's service as a Non-Employee Director or employee of or consultant to the Company or any Affiliate terminates for any reason or for no reason, the option shall terminate on the earlier of the Expiration Date or the date twelve (12) months following the date of termination of all such service; provided, however, that if such termination of service is due to the optionee's death, the option shall terminate on the earlier of the Expiration Date or eighteen (18) months following the date of the optionee's death. In any and all circumstances, an option may be exercised following termination of the optionee's service as a Non-Employee Director or employee of or consultant to the Company or any Affiliate only as to that number of shares as to which it was exercisable as of the date of termination of all such service under the provisions of subparagraph 6(e). (b) The exercise price of each option shall be equal to one hundred percent (100%) of the Fair Market Value of the stock (as such term is defined in subsection 9(e) of this Plan) subject to such option on the date such option is granted. (c) The optionee may elect to make payment of the exercise price under one of the following alternatives: 2.

(i) In cash (or check) at the time of exercise; (ii) Provided that at the time of the exercise the Company's common stock is publicly traded and quoted regularly in The Wall Street Journal, payment by delivery of shares of common stock of the Company already owned by the optionee, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interest, which common stock shall be valued at its Fair Market Value on the date immediately preceding the date of exercise; or (iii) Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company either prior to the issuance of shares of the Company's common stock or pursuant to the terms of irrevocable instructions issued by the optionee prior to the issuance of shares of the Company's common stock. (iv) Payment by a combination of the methods of payment specified in subparagraph 6(c)(i) through 6(c)(iii) above. (d) An option shall be transferable only to the extent specifically provided in the option agreement; provided, however, that if the option agreement does not specifically provide for the transferability of an option, then the option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the option is granted only by such person (or by his guardian or legal representative) or transferee pursuant to such an order. Notwithstanding the foregoing, the optionee may, by delivering written notice to the Company in a form satisfactory to the Company, designate a third party who, in the event of the death of the optionee, shall thereafter be entitled to exercise the option. (e) (i) An Initial Grant shall become exercisable in four (4) equal annual installments measured from the date of grant, commencing on the one (1)-year anniversary of the date of grant of the option, and (ii) an Annual Grant shall become exercisable one (1) year from the date of grant, provided that, with respect to any grant under the Plan, the optionee has, during the entire period prior to such vesting installment date, continuously served as a Non-Employee Director or employee of or consultant to the Company or any Affiliate of the Company, whereupon such option shall become fully exercisable in accordance with its terms with respect to that portion of the shares represented by that installment. (f) The Company may require any optionee, or any person to whom an option is transferred under subparagraph 6(d), as a condition of exercising any such option: (i) to give written assurances satisfactory to the Company as to the optionee's knowledge and experience in financial and business matters; and (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the option for such person's own account and not with any present intention of selling or otherwise distributing the stock. These requirements, and any assurances given pursuant to such requirements, shall be inoperative if 3.

(x) the issuance of the shares upon the exercise of the option has been registered under a then currently-effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (y) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may require any optionee to provide such other representations, written assurances or information which the Company shall determine is necessary, desirable or appropriate to comply with applicable securities laws as a condition of granting an option to the optionee or permitting the optionee to exercise the option. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (g) Notwithstanding anything to the contrary contained herein, an option may not be exercised unless the shares issuable upon exercise of such option are then registered under the Securities Act or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. 7. COVENANTS OF THE COMPANY. (a) During the terms of the options granted under the Plan, the Company shall keep available at all times the number of shares of stock required to satisfy such options. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the options granted under the Plan; provided however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any option granted under the Plan, or any stock issued or issuable pursuant to any such option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such options. 8. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to options granted under the Plan shall constitute general funds of the Company. 9. MISCELLANEOUS. (a) Neither an optionee nor any person to whom an option is transferred under subparagraph 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder 4.

with respect to, any shares subject to such option unless and until such person has satisfied all requirements for exercise of the option pursuant to its terms. (b) Nothing in the Plan or in any instrument executed pursuant thereto shall confer upon any Non-Employee Director any right to continue in the service of the Company or any Affiliate in any capacity or shall affect any right of the Company, its Board or stockholders or any Affiliate, to remove any Non-Employee Director pursuant to the Company's Bylaws and the provisions of Delaware General Corporations Law. (c) No Non-Employee Director, individually or as a member of a group, and no beneficiary or other person claiming under or through him, shall have any right, title or interest in or to any option reserved for the purposes of the Plan except as to such shares of common stock, if any, as shall have been reserved for him pursuant to an option granted to him. (d) In connection with each option made pursuant to the Plan, it shall be a condition precedent to the Company's obligation to issue or transfer shares to a Non-Employee Director, or to evidence the removal of any restrictions on transfer, that such Non-Employee Director make arrangements satisfactory to the Company to insure that the amount of any federal, state or local withholding tax required to be withheld with respect to such sale or transfer, or such removal or lapse, is made available to the Company for timely payment of such tax. (e) As used in this Plan, "Fair Market Value" means, as of any date, the value of the common stock of the Company determined as follows: (i) If the common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (ii) In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board. 10. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any option granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan and outstanding options will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and number of shares and price per share of stock subject to outstanding options. Such adjustments 5.

shall be made by the Board, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") (b) In the event of: (1) a dissolution, liquidation, or sale of all or substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then to the extent not prohibited by applicable law, the time during which options outstanding under the Plan may be exercised shall be accelerated prior to such event and the options terminated if not exercised after such acceleration and at or prior to such event. 11. AMENDMENT OF THE PLAN. (a) The Board at any time, and from time to time, may amend the Plan and/or some or all outstanding options granted under the Plan. However, except as provided in paragraph 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Rule 16b-3 promulgated under the Exchange Act or any Nasdaq or securities exchange listing requirements. (b) Rights and obligations under any option granted before any amendment of the Plan shall not be impaired by such amendment unless (i) the Company requests the consent of the person to whom the option was granted and (ii) such person consents in writing. 12. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on [August 31, 2007]. No options may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any option granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the consent of the person to whom the option was granted. 6.

(c) The Plan shall terminate upon the occurrence of any of the events described in Section 10(b) above. 13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE. (a) The Plan shall become effective upon adoption by the Board. (b) No option granted under the Plan shall be exercised or become exercisable unless and until the Plan is approved by the stockholders of the Company. 7.

Exhibit 10.7 GENE LOGIC INC. 1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN NONSTATUTORY STOCK OPTION _______________________, Optionee: On __________________, 19___, an option was automatically granted to you (the "Optionee") pursuant to the Gene Logic Inc. (the "Company") 1997 Non-Employee Directors' Stock Option Plan (the "Plan") to purchase shares of the Company's common stock ("Common Stock"). This option is not intended to qualify and will not be treated as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for Non-Employee Directors (as defined in the Plan). The details of your option are as follows: 1. The total number of shares of Common Stock subject to this option is [thirty thousand (30,000)] [seven thousand five hundred (7,500)]. 2. The exercise price of this option is _____________________ ($________) per share, such amount being equal to the Fair Market Value (as defined in the Plan) of the Common Stock on the date of grant of this option. 3. (a) Subject to the limitations contained herein, if: (i) this option is exercisable for 30,000 shares, then this option shall become exercisable (i.e., vest) in four (4) equal annual installments with the first installment becoming exercisable one (1) year after the date of grant; or (ii) this option is exercisable for 7,500 shares, then this option shall become exercisable (i.e., vest) one (1) year after the date of grant; provided, however, that you have, during the period from the date of grant to such vesting date, continuously served as a Non-Employee Director or employee of or consultant to the Company or any Affiliate (as defined in the Plan), whereupon this option shall become fully exercisable with respect to that portion of the shares represented by that installment. (b) Notwithstanding anything to the foregoing, this option shall not be exercisable in whole or in part unless and until the Plan has been approved by the Company's stockholders. 4. (a) This option may be exercised, to the extent specified above, by delivering a Notice of Exercise (in the form attached hereto or such other form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to Section 6 of the Plan. 1.

(b) This option may only be exercised for whole shares. (c) You may elect to pay the exercise price under one of the following alternatives: (i) In cash (or check) at the time of exercise; (ii) Provided that at the time of the exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, payment by delivery of shares of Common Stock already owned by you, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interest, which Common Stock shall be valued at its Fair Market Value on the date immediately preceding the date of exercise; or (iii) Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company either prior to the issuance of shares of the Common Stock or pursuant to the terms of irrevocable instructions issued by you prior to the issuance of shares of the Common Stock. (iv) Payment by a combination of the methods of payment specified in subparagraphs (i) through (iii) above. (d) By exercising this option you agree that the Company may require you to enter an arrangement providing for the cash payment by you to the Company of any tax withholding obligation of the Company arising by reason of the exercise of this option. 5. The term of this option is ten (10) years measured from the date of grant, subject, however, to earlier termination upon your termination of service, as set forth in Section 6(a) of the Plan. 6. Any notices provided for in this option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company. 7. This option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant 2.

to the Plan. In the event of any conflict between the provisions of this option and those of the Plan, the provisions of the Plan shall control. Dated the ____ day of _______________, 19__. Very truly yours, Gene Logic Inc. By: Duly authorized on behalf of the Board of Directors ATTACHMENTS: Notice of Exercise 1997 Non-Employee Directors' Stock Option Plan 3.

The undersigned: (a) Acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and liabilities with respect to this option are set forth in the option and the Plan; and (b) Acknowledges that as of the date of grant of this option, it sets forth the entire understanding between the undersigned Optionee and the Company and its Affiliates regarding the acquisition of Common Stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the options and any other stock awards previously granted and delivered to the undersigned under stock award plans of the Company, and (ii) the following agreements only: NONE: (Initial) OTHER:

Optionee Address: 4.

GENE LOGIC INC. 1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN NOTICE OF EXERCISE Gene Logic Inc.

------------------ Date of Exercise: Ladies and Gentlemen: This constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. Type of option: Nonstatutory Stock option dated: Number of shares for which option is exercised: Certificates to be issued in name of: Total exercise price: $ Cash payment delivered herewith: $ Value of ______ shares of common stock delivered herewith(1): $ By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Company's 1997 Non-Employee Directors' Stock Option Plan and (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option. [USE FOLLOWING LANGUAGE ONLY IF GRANTS MADE PRE-IPO]

(1) Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, must have been owned for the minimum period required in the option, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. 1.

[I hereby make the following certifications and representations with respect to the number of shares of Common Stock (the "Shares"), which are being acquired by me for my own account upon exercise of the Option as set forth above: I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and are deemed to constitute "restricted securities" under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Act and any applicable state securities laws. I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144. I further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or applicable securities laws. I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, I will not sell or otherwise transfer or dispose of any shares of Common Stock or other securities of the Company during such period (not to exceed one hundred eighty (180) days following the effective date of the registration statement of the Company filed under the Securities Act as may be requested by the Company or the representative of the underwriters. I further agree that the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.] Very truly yours,

2.

Exhibit 10.8 GENE LOGIC INC. Stock Restriction Agreement AGREEMENT dated as of July 31, 1996, by and between Gene Logic Inc., a Delaware corporation (the "Company") and Mark D. Gessler (the "Stockholder"). WITNESSETH WHEREAS, the Stockholder has as of the date of this Agreement acquired 75,000 shares of the Company's Common Stock (the "Shares"); WHEREAS, the Stockholder is an executive officer of the Company; and WHEREAS, the parties hereto desire to provide for the continuity of ownership and management of the Company to best further the interests of the Company and its present and future stockholders; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Repurchase Option. (a) If the Stockholder shall for any reason (including, without limitation, involuntary removal with or without cause) cease to be employed by the Company, the Company shall have an irrevocable and exclusive right, for 60 days from the date upon which the Stockholder shall so cease to be employed by the Company (which date shall be determined in the sole reasonable judgment of the Company and shall be referred to herein as the "Termination Date"), to purchase all or any portion of the Shares, other than Vested Shares (as such term is defined below). (b) "Vested Shares" shall mean those Shares released from the Company's repurchase option, as set forth in Section 1(a) above, in accordance with the following schedule, subject to the continued service of the Stockholder as an employee of the Company: 25% of the Shares on the date hereof and an additional 1/36 of the remaining Shares on the first day of each month commencing June 1, 1997 and continuing thereafter until June 1, 2000 (at which time, all Shares shall have become Vested Shares). If the Stockholder ceases to be an employee of the Company, no further shares beyond those already vested upon the Termination Date shall vest pursuant to this Agreement. If (i) the Company is merged or consolidated with, or all or substantially all of its assets are acquired by, another entity, or (ii) the Company issues and sells shares of its Common Stock to the public in a firm underwriting pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") and the

Stockholder has continued to serve as an employee of the Company through the effective date of such merger, consolidation, sale or public offering, then upon the consummation of such merger, consolidation, sale or public offering all unvested Shares held by the Stockholder on such date shall immediately become Vested Shares and the Company's repurchase right under this Section 1 shall terminate. (c) The purchase price at which the Company may exercise its option to purchase the Shares under this Section 1 (the "Option Price") shall be $.15 per share. 2. Right of First Refusal. In the event the Stockholder shall desire to sell or otherwise dispose of any portion of the Shares, including the Vested Shares, the Stockholder shall (i) obtain an irrevocable and unconditional bona fide offer in writing (the "Bona Fide Offer") for the purchase thereof and (ii) give written notice (the "Option Notice") to the Company setting forth his desire to sell such Shares, which Option Notice shall be accompanied by a photocopy of the original executed Bona Fide Offer. The Company shall have a non-assignable option, exercisable for 30 days from receipt of the Option Notice, to purchase any or all shares proposed to be sold, at a price and on terms identical to those set forth in the Bona Fide Offer. 3. Restrictions on Transfer. The Stockholder may not sell, assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or in any way encumber all or any of the Shares, except as provided in this Agreement. Notwithstanding the foregoing, the Stockholder may transfer all or any of the Shares to any member of his family or to any trust for the benefit of any such family member or the Stockholder, provided that any such transferee shall agree in writing, as a condition to such transfer, to be bound by all of the provisions of this Agreement. As used herein, the word "family" shall mean any parent, spouse, lineal descendant, brother or sister. 4. Adjustments. If there shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, or the like, all of the terms and provisions of this Agreement shall apply to any new, additional or different shares of securities issued to the Stockholder as replacements for the Shares or otherwise as a result of such event, and the price and the number of shares or other securities that may be purchased by the Company pursuant to this Agreement shall be appropriately adjusted. 5. Recognition of Transferee. The Company shall not (i) transfer on its books record ownership of any Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or (ii) recognize the right to vote, or to receive dividends upon, such Shares with respect to any transferee to whom such Shares shall have been so transferred. -2-

6. Rights of Stockholder. This Agreement shall not be deemed to be an employment contract, and nothing in this Agreement shall affect in any way the right or power of the Company to terminate the Stockholder's service as a consultant to the Company. 7. Specific Enforcement. Each of the parties hereto acknowledges that the parties will be irreparably damaged in the event that this Agreement is breached. Upon a breach or threatened breach in the terms, covenants or conditions of this Agreement by either of the parties hereto, the other party shall be entitled (in addition to all other remedies) to a temporary or permanent injunction, without showing any actual damage, or a decree for specific performance, in accordance with the provisions hereof. 8. Notices. Any notice required to be given hereunder shall be in writing and shall be deemed to be properly given when sent by registered or certified mail, return receipt requested, addressed, if to the Company, to its President at the Company's principal office, and if to the Stockholder, to his address as shown on the stock transfer records of the Company, or in either case to such other address as to which either party shall give the other notice pursuant to this Section. 9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. 10. Waivers; Amendments. No waiver of any right hereunder by either party shall operate as a waiver of any other right, or of the same right with respect to any subsequent occasion for its exercise, or of any right to damages. No waiver by either party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a continuation of the same breach. All remedies provided by this Agreement are in addition to all other remedies provided by law. This Agreement may not be amended except in writing signed by the parties hereto. 11. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto. 12. Severability. If any provision of this Agreement shall be declared void and unenforceable by any judicial or administrative authority, the validity of any other provisions and of the entire Agreement shall not be affected thereby. 13. Prior Understandings. This Agreement represents the complete agreement of the parties with respect to the transactions contemplated hereby and supersedes all prior agreement and understandings. 14. Termination. The Company's right of first refusal set forth in Section 2 shall terminate upon the consummation of an underwritten public offering of the Company's -3-

Common Stock, pursuant to an effective registration statement under the Securities Act, in which the aggregate net proceeds to the Company exceed $10,000,000. 15. Headings. Headings in this Agreement are included for reference only and shall have no affect upon the construction or interpretation of any part of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement under seal, as of the date first above written. GENE LOGIC INC.
By: /s/ Michael J. Brennan ----------------------------Michael J. Brennan President /s/ Mark D. Gessler -------------------------------Mark D. Gessler

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Exhibit 10.9 GENE LOGIC INC. Stock Restriction Agreement AGREEMENT dated as of December 20, 1996, by and between Gene Logic Inc., a Delaware corporation (the "Company") and Mark D. Gessler (the "Stockholder"). WITNESSETH WHEREAS, the Stockholder has as of the date of this Agreement acquired 25,000 shares of the Company's Common Stock (the "Shares"); WHEREAS, the Stockholder is an executive officer of the Company; and WHEREAS, the parties hereto desire to provide for the continuity of ownership and management of the Company to best further the interests of the Company and its present and future stockholders; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Repurchase Option. (a) If the Stockholder shall for any reason (including, without limitation, involuntary removal with or without cause) cease to be employed by the Company, the Company shall have an irrevocable and exclusive right, for 60 days from the date upon which the Stockholder shall so cease to be employed by the Company (which date shall be determined in the sole reasonable judgment of the Company and shall be referred to herein as the "Termination Date"), to purchase all or any portion of the Shares, other than Vested Shares (as such term is defined below). (b) "Vested Shares" shall mean those Shares released from the Company's repurchase option, as set forth in Section 1(a) above, in accordance with the following schedule, subject to the continued service of the Stockholder as an employee of the Company: o 6,250 Shares on the date hereof o An additional 521 Shares on the first day of each month beginning on July 1, 1997 and continuing through and including May 1, 2000 o An additional 515 Shares on July 1, 2000 (at which time, all 25,000 Shares shall have become Vested Shares).

If the Stockholder ceases to be an employee of the Company, no further shares beyond those already vested upon the Termination Date shall vest pursuant to this Agreement. If (i) the Company is merged or consolidated with, or all or substantially all of its assets are acquired by, another entity, or (ii) the Company issues and sells shares of its Common Stock to the public in a firm underwriting pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") and the Stockholder has continued to serve as an employee of the Company through the effective date of such merger, consolidation, sale or public offering, then upon the consummation of such merger, consolidation, sale or public offering all unvested Shares held by the Stockholder on such date shall immediately become Vested Shares and the Company's repurchase right under this Section 1 shall terminate. (c) The purchase price at which the Company may exercise its option to purchase the Shares under this Section 1 (the "Option Price") shall be $.15 per share. 2. Right of First Refusal. In the event the Stockholder shall desire to sell or otherwise dispose of any portion of the Shares, including the Vested Shares, the Stockholder shall (i) obtain an irrevocable and unconditional bona fide offer in writing (the "Bona Fide Offer") for the purchase thereof and (ii) give written notice (the "Option Notice") to the Company setting forth his desire to sell such Shares, which Option Notice shall be accompanied by a photocopy of the original executed Bona Fide Offer. The Company shall have a non-assignable option, exercisable for 30 days from receipt of the Option Notice, to purchase any or all shares proposed to be sold, at a price and on terms identical to those set forth in the Bona Fide Offer. 3. Restrictions on Transfer. The Stockholder may not sell, assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or in any way encumber all or any of the Shares, except as provided in this Agreement. Notwithstanding the foregoing, the Stockholder may transfer all or any of the Shares to any member of his family or to any trust for the benefit of any such family member or the Stockholder, provided that any such transferee shall agree in writing, as a condition to such transfer, to be bound by all of the provisions of this Agreement. As used herein, the word "family" shall mean any parent, spouse, lineal descendant, brother or sister. 4. Adjustments. If there shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, or the like, all of the terms and provisions of this Agreement shall apply to any new, additional or different shares of securities issued to the Stockholder as replacements for the Shares or otherwise as a result of such event, and the price and the number of shares or other securities that may be purchased by the Company pursuant to this Agreement shall be appropriately adjusted. -2-

5. Recognition of Transferee. The Company shall not (i) transfer on its books record ownership of any Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or (ii) recognize the right to vote, or to receive dividends upon, such Shares with respect to any transferee to whom such Shares shall have been so transferred. 6. Rights of Stockholder. This Agreement shall not be deemed to be an employment contract, and nothing in this Agreement shall affect in any way the right or power of the Company to terminate the Stockholder's service as a consultant to the Company. 7. Specific Enforcement. Each of the parties hereto acknowledges that the parties will be irreparably damaged in the event that this Agreement is breached. Upon a breach or threatened breach in the terms, covenants or conditions of this Agreement by either of the parties hereto, the other party shall be entitled (in addition to all other remedies) to a temporary or permanent injunction, without showing any actual damage, or a decree for specific performance, in accordance with the provisions hereof. 8. Notices. Any notice required to be given hereunder shall be in writing and shall be deemed to be properly given when sent by registered or certified mail, return receipt requested, addressed, if to the Company, to its President at the Company's principal office, and if to the Stockholder, to his address as shown on the stock transfer records of the Company, or in either case to such other address as to which either party shall give the other notice pursuant to this Section. 9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. 10. Waivers; Amendments. No waiver of any right hereunder by either party shall operate as a waiver of any other right, or of the same right with respect to any subsequent occasion for its exercise, or of any right to damages. No waiver by either party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a continuation of the same breach. All remedies provided by this Agreement are in addition to all other remedies provided by law. This Agreement may not be amended except in writing signed by the parties hereto. 11. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto. 12. Severability. If any provision of this Agreement shall be declared void and unenforceable by any judicial or administrative authority, the validity of any other provisions and of the entire Agreement shall not be affected thereby. -3-

13. Prior Understandings. This Agreement represents the complete agreement of the parties with respect to the transactions contemplated hereby and supersedes all prior agreement and understandings. 14. Termination. The Company's right of first refusal set forth in Section 2 shall terminate upon the consummation of an underwritten public offering of the Company's Common Stock, pursuant to an effective registration statement under the Securities Act, in which the aggregate net proceeds to the Company exceed $10,000,000. 15. Headings. Headings in this Agreement are included for reference only and shall have no affect upon the construction or interpretation of any part of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement under seal, as of the date first above written. GENE LOGIC INC.
By: /s/ Michael J. Brennan ----------------------------President /s/ Mark D. Gessler -------------------------------Mark D. Gessler

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Exhibit 10.10 GENE LOGIC INC. STOCK RESTRICTION AGREEMENT AGREEMENT dated as of February 29, 1996, by and between Gene Logic Inc. (formerly known as Senatics Corporation), a Delaware corporation (the "Company") and Michael J. Brennan (the "Stockholder"). WITNESSETH WHEREAS, the Stockholder has as of the date of this Agreement acquired 100,000 shares of the Company's Common Stock (the "Shares"); WHEREAS, the Stockholder is President and Chief Executive Officer of the Company; and WHEREAS, the parties hereto desire to provide for the continuity of ownership and management of the Company to best further the interests of the Company and its present and future stockholders; NOW, THEREFORE, in consideration of the mutual covenants herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. REPURCHASE OPTION. (a) If the Stockholder shall for any reason (including, without limitation, death, disability or involuntary removal with or without cause) cease to be a consultant to the Company, the Company shall have an irrevocable and exclusive right, for 60 days from the date upon which the Stockholder shall so cease to be a consultant to the Company (which date shall be determined in the sole reasonable judgment of the Company and shall be referred to herein as the "Termination Date "), to purchase all or any portion of the Shares, other than Vested Shares (as such term is defined below). (b) "Vested Shares" shall mean those Shares released from the Company's repurchase option, as set forth in Section 1 (a) above, in accordance with the following schedule, subject to the continued service of the Stockholder as a consultant to the Company: 25% of the Shares on the date hereof and an additional 25% of the Shares on March 31 of each year commencing March 31, 1996, and continuing thereafter until March 31, 1998. If the Stockholder ceases to be a consultant to the Company, no further shares beyond those already vested upon the Termination Date shall vest pursuant to this Agreement. 1.

If (i) the Company is merged or consolidated with, or all or substantially all of its assets are acquired by, another entity, or (ii) the Company issues and sells shares of the Common Stock to the public in a firm underwriting pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") and the stockholder has continued to serve as an employee of the Company through the effective date of such merger, consolidation, sale or public offering, then upon the consummation of such merger, consolidation, sale or public offering all unvested Shares held by the Stockholder on such date shall immediately become Vested Shares and the Company's repurchase right under this Section 1 shall terminate. (c) The purchase price at which the Company may exercise its option to purchase the Shares under this Section 1 (the "Option Price") shall be $.01 per share. 2. RIGHT OF FIRST REFUSAL. In the event the Stockholder shall desire to sell or otherwise dispose of any portion of the Shares, including the Vested Shares, the Stockholder shall (i) obtain an irrevocable and unconditional bona fide offer in writing (the "Bona Fide Offer") for the purchase thereof and (ii) give written notice (the "Option Notice") to the Company setting forth his desire to sell such Shares, which Option Notice shall be accompanied by a photocopy of the original executed Bona Fide Offer. The Company shall have a non-assignable option, exercisable for 30 days from receipt of the Option Notice, to purchase any or all shares proposed to be sold, at a price and on terms identical to those set forth in the Bona Fide Offer. 3. RESTRICTIONS ON TRANSFER. The Stockholder may not sell, assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or in any way encumber all or any of the Shares, except as provided in this Agreement. Notwithstanding the foregoing, the Stockholder may transfer all or any of the Shares to any member of his family or to any trust for the benefit of any such family member or the Stockholder, provided that any such transferee shall agree in writing, as a condition to such transfer, to be bound by all of the provisions of this Agreement. As used herein, the word "family" shall mean any parent, spouse, lineal descendant, brother or sister. 4. ADJUSTMENTS. If there shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, or the like, all of the terms and provisions of this Agreement shall apply to any new, additional or different shares of securities issued to the Stockholder as replacements for the Shares or otherwise as a result of such event, and the price and the number of shares or other securities that may be purchased by the Company pursuant to this Agreement shall be appropriately adjusted. 2.

5. RECOGNITION OF TRANSFEREE. The Company shall not (i) transfer on its books record ownership of any Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or (ii) recognize the right to vote, or to receive dividends upon, such Shares with respect to any transferee to whom such Shares shall have been so transferred. 6. RIGHTS OF STOCKHOLDER. This Agreement shall not be deemed to be an employment contract, and nothing in this Agreement shall affect in any way the right or power of the Company to terminate the Stockholder's service as a consultant to the Company. 7. SPECIFIC ENFORCEMENT. Each of the parties hereto acknowledges that the parties will be irreparably damaged in the event that this Agreement is breached. Upon a breach or threatened breach in the terms, covenants or conditions of this Agreement by either of the parties hereto, the other party shall be entitled (in addition to all other remedies) to a temporary or permanent injunction, without showing any actual damage, or a decree for specific performance, in accordance with the provisions hereof. 8. NOTICES. Any notice required to be given hereunder shall be in writing and shall be deemed to be properly given when sent by registered or certified mail, return receipt requested, addressed, if to the Company, to its President at the Company's principal office, and if to the Stockholder, to his address as shown on the stock transfer records of the Company, or in either case to such other address as to which either party shall give the other notice pursuant to this Section. 9. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. 10. WAIVERS; AMENDMENTS. No waiver of any right hereunder by either party shall operate as a waiver of any other right, or of the same right with respect to any subsequent occasion for its exercise, or of any right to damages. No waiver by either party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a continuation of the same breach. All remedies provided by this Agreement are in addition to all other remedies provided by law. This Agreement may not be amended except in writing signed by the parties hereto. 11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto. 12. SEVERABILITY. If any provision of this Agreement shall be declared void and unenforceable by any judicial or administrative authority, the validity of any other provisions and of the entire Agreement shall not be affected thereby. 3.

13. PRIOR UNDERSTANDINGS. This Agreement represents the complete agreement of the parties with respect to the transactions contemplated hereby and supersedes all prior agreement and understandings. 14. TERMINATION. The Company `s right of first refusal set forth in Section 2 shall terminate upon the consummation of an underwritten public offering of the Company's Common Stock, pursuant to an effective registration statement under the Securities Act at an initial offering price of not less than $10 per share, in which the aggregate net proceeds to the Company exceed $10,000,000. 15. HEADINGS. Headings in this Agreement are included for reference only and shall have no affect upon the construction or interpretation of any part of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement under seal, as of the date first above written. GENE LOGIC INC.
By: /s/ Mark D. Gessler --------------------------------------Mark D. Gessler, Senior Vice President

/s/ Michael J. Brennan --------------------------------------Michael J. Brennan

Exhibit 10.11 GENE LOGIC INC. AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of July 15, 1997, by and among (i) GENE LOGIC INC., a Delaware corporation (the "Company"), (ii) holders of the Company's Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock (such holders are listed on Exhibit A attached hereto and are referred to herein individually as a "Previous Investor" and collectively as "Previous Investors") and (iii) the Purchasers listed on Exhibit A of that certain Preferred Stock Purchase Agreement of even date herewith (the "Purchase Agreement") and Exhibit B hereto (the "Purchasers"). Each of the Previous Investors and the Purchasers are referred to herein as an "Investor," collectively they are referred to as the "Investors." This Agreement supersedes, amends and restates in its entirety that certain Registration Rights Agreement dated as of April 2, 1996 and amended October 21, 1996, by and among the Company and the Investors defined therein (the "Previous Registration Rights Agreement"). This Agreement supersedes, amends and restates Articles V and VI of the certain Preferred Stock Purchase Agreement dated as of April 2, 1996 and amended October 21, 1996, by and among the Company and the Preferred Stockholders defined therein (the "Series B Purchase Agreement"). WHEREAS, the Company proposes to issue and sell up to an aggregate 4,444,444 shares of its Series C Preferred Stock pursuant to the Purchase Agreement (the "Financing"); WHEREAS, as a condition to entering into the Purchase Agreement, the Purchasers have requested that the Company extend to them registration rights and certain other rights and covenants as set forth herein; WHEREAS, in order to induce the Purchasers to enter into the Purchase Agreement and to induce the Purchasers to invest funds in the Company, the Company and the Previous Investors have agreed to enter into this Agreement in order to (i) supersede, amend and restate the Previous Registration Rights Agreement and (ii) supersede, amend and restate Article V and Article VI of the Series B Purchase Agreement so that this Agreement is the sole agreement with respect to the obligations and rights contained herein;

WHEREAS, Section 13(d) of the Previous Registration Rights Agreement provides that such agreement may be amended with the written consent of the Company and the holders of at least a majority of the outstanding shares of Registrable Securities (as defined in the Previous Registration Rights Agreement); WHEREAS, Section 8.3 of the Series B Purchase Agreement provides that Article V of such agreement may be amended and any of its restrictions or provisions may be waived by the consent of the Company and the holders of (i) a majority of shares of Common Stock issued or issuable upon conversion of the Company's Series B Preferred Stock, (ii) a majority of shares of Common Stock issued or issuable upon conversion of the Company's Series A Preferred Stock, and (iii) a majority of shares of Common Stock issued or issuable upon conversion of the Company's Series A-1 Preferred Stock; and WHEREAS, Section 8.3 of the Series B Purchase Agreement provides that Article VI of such agreement may be amended and any of its restrictions or provisions may be waived by the consent of the Company and of holders of not less than a majority of shares of Common Stock issued or issuable upon conversion of the Company's Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock; NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement, the parties hereby agree that the Previous Registration Rights Agreement and Articles V and VI of the Series B Purchase Agreement are amended and restated in their entirety to read as set forth above and as follows: 1. GENERAL 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commission" shall mean the Securities and Exchange Commission and any successor agency of the Federal government administering the Securities Act. "Common Stock" shall mean (i) the common stock, $0.01 par value per Stock, of the Company; (ii) any other capital stock of the Company, however designated, authorized on or after the date hereof, which shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; and (iii) any other securities into which or for which any of the securities described in (i) or (ii) may be 2.

converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, consolidation, sale of assets or other similar transaction. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and any similar or successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Investment" shall mean, with respect to any Person, any loan, advance or extension of credit (other than in connection with the sale by such Person of products or services in the ordinary course of business) by such Person to, and any guarantee or other contingent liability with respect to the capital stock, indebtedness or other obligations of, and any contributions to the capital of, any other Person, as well as any ownership, purchase or other acquisitions by such Person of any interest in any capital stock or other securities of any such other Person as well as any transfer or sale (other than in connection with the sale by such Person of products or services in the ordinary course of business) of property by such Person to any other Person other than upon full payment, in cash, of not less than the agreed sale price or the fair value of such property, whichever is higher. "Lien" shall mean: (i) any interest in property (whether real, personal or mixed and whether tangible or intangible) which secures an obligation owed to, or a claim by, a Person other than the owner of such property, whether such interest is based on the common law, statute or contract, including, without limitation, any such interest arising from a lease, mortgage, charge, pledge, security agreement, conditional sale, trust receipt or deposit in trust, or arising from a consignment of bailment given for security purposes (other than a trust receipt or deposit given in the ordinary course of business which does not secure any obligation for borrowed money), (ii) any encumbrance upon such property which does not secure such an obligation, and (iii) any exception to or defect in the title to or ownership interest in such property, including, without limitation, reservations, rights of entry, possibilities of reverter, encroachments, easements, rights of way, restrictive covenants, licenses and profits a prendre. For purposes of this Agreement, any Person shall be deemed to be the owner of the leasehold or other interest in any property which it has acquired or holds subject to a lease and the owner of any property which it has acquired or holds subject to a conditional sale agreement or other similar arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes. "Permitted Liens" shall mean: (a) for taxes, assessments or governmental charges or levies on property of the Company if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings; 3.

(b) imposed by law, such as carriers, warehousemen's and mechanics' Liens and other similar Liens arising in the ordinary course of business; (c) arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d) in the nature of zoning restriction, easements and rights or restrictions of record on the use of real property which do not materially detract from its value or impair its use; (e) arising from any litigation or proceeding which is being contested in good faith by appropriate proceedings, provided, however, that no execution or levy has been made; (f) securing the performance of bids, tenders, contracts (other than for the repayment of borrowed money), statutory obligations and surety bonds; (g) arising by operation of law in favor of the owner or sublessor of leased premises and confined to the property rented; and (h) any lien created in connection with an equipment financing transaction. "Person" shall include an individual, a corporation, an association, a partnership, a trust or estate, a governmental and any agency or political subdivision thereof, or any other entity. "Preferred Stock" shall mean (i) the Series A Preferred Stock, (ii) the Series A-1 Preferred Stock, (iii) the Series B Preferred Stock and (iv) the Series C Preferred Stock. The terms "register", "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement, or, as the context may require, under the Exchange Act or applicable state securities laws. "Registrable Securities" shall mean (i) the Preferred Stock, (ii) shares of Common Stock or other securities issued or issuable pursuant to the conversion of the Preferred Stock, (iii) shares of Common Stock or other securities issued or issuable pursuant to the exercise of the Warrants and (iv) any shares of Common Stock or other securities issued in respect of securities issued pursuant to the conversion of the Preferred Stock or the exercise of the Warrants upon any stock split, stock dividend, 4.

recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have been (a) registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) publicly sold pursuant to Rule 144 under the Securities Act. Wherever reference is made in this Agreement to a request or consent of holders of a certain percentage of Registrable shares, the determination of such percentage shall be calculated on the basis of shares of Common Stock issued or issuable upon conversion of the Preferred Stock and exercise of the Warrants even if such conversion or exercise has not been effected. "Registration Expenses" shall mean the expenses so described in Section 2.7. "Securities Act" shall mean the Securities Act of 1933, as amended, and any similar or successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Selling Expenses" shall mean the expenses so described in Section 2.7. "Subsidiary" or "Subsidiaries" shall mean any corporation, partnership, trust or other entity of which the Company and/or any of its other Subsidiaries directly or indirectly owns at the time a majority of the outstanding shares of any class of equity security of such corporation, partnership, trust or other entity. "Warrants" shall mean the (i) warrants for the purchase (subject to adjustment as provided therein) of up to an aggregate of 50,000 shares of Common Stock, issued to the holders of the Series A-1 Preferred Stock, and (ii) warrants for the purchase (subject to adjustment as provided therein) of up to an aggregate of 52,272 shares of Series B Preferred Stock, issued in connection with equipment financing transactions. 2. RESTRICTIONS ON TRANSFER; REGISTRATION 2.1 Restrictive Legend. Each certificate representing Registrable Securities shall, except as otherwise provided in this Section 2.1 or in Section 2.2, be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws): "The securities represented by this certificate have not been registered under the Securities Act of 1933 or any other securities laws. These securities have been acquired for investment and not with a view to distribution or resale. Such securities may not be offered for sale, sold, delivered after sale, transferred, pledged or hypothecated in the absence of an effective registration statement covering such securities under the Securities Act of 1933 and any other applicable securities laws, unless the 5.

holder shall have obtained an opinion of counsel reasonably satisfactory to the corporation that such registration is not required." Upon request of a holder of such a certificate, the Company shall remove the foregoing legend from the certificate or issue to such holder a new certificate therefor free of any transfer legend, if there is an effective registration statement covering the securities represented by such certificate or, with such request, the Company shall have received either the opinion referred to in Section 2.2(a) or the "no-action" letter referred to in Section 2.2(b). 2.2 Notice of Proposed Transfer. Prior to any proposed sale, pledge, hypothecation or other transfer of any Registrable Securities (other than under the circumstances described in Section 2.3, 2.4 or 2.5 and other than pursuant to that certain Stock Repurchase Agreement, dated April 2, 1996, by and between the Company and the State of Maryland, Department of Business and Economic Development), the holder thereof shall give written notice to the Company of its intention to effect such sale, pledge, hypothecation or other transfer. Each such notice shall describe the manner of the proposed sale, pledge, hypothecation or other transfer and, if requested by the Company (it being understood that if such transfer is intended to be in accordance with the provisions of Rule 144, the Company shall not require an opinion of counsel), shall be accompanied by either (a) an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed sale, pledge, hypothecation or other transfer may be effected without registration under the Securities Act or (b) a "no action" letter from the Commission to the effect that the distribution of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such stock shall be entitled to transfer such stock in accordance with the terms of its notice; provided, however, that no such opinion of counsel shall be required for a distribution to one or more partners of the transferor (in the case of a transferor that is a partnership) or to a stockholder (in the case of a transferor that is a corporation) in each case in respect of the beneficial interest of such partner or stockholder. Each certificate for Registrable Securities transferred as above provided shall bear the appropriate restrictive legend set forth in Section 2.1, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel or "no-action" letter referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Company) would be entitled to transfer such securities in a public sale without registration under the Securities Act or that such legend is not required to establish compliance with any provisions of the Securities Act. Notwithstanding any other provision hereof, the restrictions provided for in this Section 2.2 shall not apply to securities which are not required to bear the legend prescribed by Section 2.1 in accordance with the provisions of that Section. If the Company does not accept an 6.

opinion of counsel required hereby signed by the original holder's general counsel (it being agreed that an opinion of Brobeck, Phleger & Harrison shall be considered satisfactory), the Company will pay the reasonable fees and disbursements of other counsel in connection with all opinions rendered by them pursuant to this Section 2.2. 2.3 Required Registration. (a) At any time after the earlier of (i) March 31, 1998, or (ii) three months after any registration statement covering the initial public offering of securities of the Company under the Securities Act shall have become effective (an "Initial Public Offering"), the holders of Registrable Securities constituting at least 25% of the total shares of Registrable Securities then outstanding may request the Company to register for sale under the Securities Act all or any portion of the shares of Registrable Securities held by such requesting holder or holders for sale in the manner specified in such notice. Notwithstanding any other provision of this Section 2.3, the Company shall not be obligated to register any Preferred Stock or Warrants for sale pursuant to any such registration. (b) Following receipt of any notice under this Section 2.3, the Company shall immediately notify all holders of Registrable Securities from whom notice has not been received and such holders shall then be entitled within thirty (30) days after receipt of such notice from the Company to request the Company to include in the requested registration all or any portion of their shares of Registrable Securities. The Company shall use its best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in the notice from requesting holders described in paragraph (a) above, the number of shares of Registrable Securities specified in such notice (and in all notices received by the Company from other holders within thirty (30) days after the receipt of such notice by such holders). The Company shall be obligated to register the Registrable Securities pursuant to this Section 2.3 on two (2) occasions only, provided, however, that such obligation shall be deemed satisfied only when a registration statement covering all shares of Registrable Securities specified in notices received as aforesaid (except to the extent reduced (but not by more than 10%) by the managing underwriter, if any, pursuant to subsection 2.3(d)), for sale in accordance with the method of disposition specified by the requesting holders, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto. Notwithstanding anything to the contrary contained herein, no request may be made under this Section 2.3 after the effective date of a registration statement filed by the Company covering a firm commitment underwritten public offering and prior to the later to occur of the completion of the period of distribution for such offering or 120 days after the effective date of such registration statement. 7.

(c) If the holders requesting such registration intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.3 and the Company shall include such information in the written notice referred to in paragraph (b) above. The right of any holder to registration pursuant to this Section 2.3 shall be conditioned upon such holder's agreeing to participate in such underwriting and to permit inclusion of such holder's Registrable Securities in the underwriting. If such method of disposition is an underwritten public offering, the holders of at least a majority in interest of the shares of Registrable Securities to be sold in such offering may designate the managing underwriter of such offering, subject to the approval of the Company, which approval shall not be unreasonably withheld or delayed. A holder may elect to include in such underwriting all or a part of the Registrable Securities it holds. (d) A registration statement filed pursuant to this Section 2.3 may, subject to the following provisions, include (i) shares of Common Stock for sale by the Company for its own account, (ii) shares of Common Stock held by officers or directors of the Company and (iii) shares of Common Stock held by Persons who by virtue of agreements with the Company in compliance with the provisions of Section 5.6 hereof are entitled to include such shares in such registration (the "Other Stockholders"), in each case for sale in accordance with the method of disposition specified by the requesting holders. If such registration shall be underwritten, the Company, such officers and directors and Other Stockholders proposing to distribute their shares through such underwriting shall enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting on terms no less favorable to such officers, directors or Other Stockholders than the terms afforded the holders of Registrable Securities. If and to the extent that the managing underwriter determines that marketing factors require a limitation on the number of shares to be included in such registration, then the shares of Common Stock held by officers or directors (other than Registrable Securities) of the Company or by Other Stockholders (other than Registrable Securities) and shares of Common Stock to be sold by the Company for its own account shall be excluded from such registration to the extent so required by such managing underwriter, and unless the holders of such shares and the Company have otherwise agreed in writing, such exclusion shall be applied first to the shares held by the directors and officers and the Other Stockholders to the extent required by the managing underwriter, then to the shares of Common Stock of the Company to be included for its own account to the extent required by the managing underwriter. If the managing underwriter determines that marketing factors require a limitation of the number of Registrable Securities to be registered under this Section 2.3, then Registrable Securities shall be excluded in such manner that the securities to be sold shall be allocated among the selling holders pro rata based on their ownership of Registrable Securities. In any event all securities to be sold other than Registrable Securities will be excluded prior 8.

to any exclusion of Registrable Securities. No Registrable Securities or any other security excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any holder of Registrable Securities, officer, director or Other Stockholder who has requested inclusion in such registration as provided above, disapproves of the terms of the underwriting, such holder of securities may elect to withdraw therefrom by written notice to the Company and the managing underwriter. The securities so withdrawn shall also be withdrawn from registration. Except for registration statements on Form S-4, S-8 or any comparable form or successor thereto, the Company will not file with the Commission any other registration statement with respect to its Common Stock, whether for its own account or that of other stockholders, from the date of receipt of a notice from requesting holders pursuant to this Section 2.3 until the completion of the period of distribution of the registration contemplated thereby or 120 days after the effective date of such registration, whichever is later. 2.4 Incidental Registration. If the Company at any time (other than pursuant to Section 2.3 or Section 2.5) proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 or any successor to such forms or another form not available for registering the Registrable Securities for sale to the public), each such time it will promptly give written notice to all holders of the Registrable Securities of its intention so to do. Upon the written request of any such holder, received by the Company within thirty (30) days after the giving of any such notice by the Company, to register any or all of its Registrable Securities, the Company will use its best efforts to cause the Registrable Securities as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder (in accordance with its written request) of such Registrable Securities so registered. Notwithstanding any other provision of this Section 2.4, the Company shall not be obligated to register any Preferred Stock or Warrants for sale pursuant to any such registration. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the holders of Registrable Securities as a part of the written notice given pursuant to this Section 2.4. In such event the right of any holder of Registrable Securities to registration pursuant to this Section 2.4 shall be conditioned upon such holder's participation in such underwriting to the extent provided herein. All holders of Registrable Securities proposing to distribute their securities through such underwriting shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company. Notwithstanding any other provision of this Section 2.4, if the underwriter determines that marketing factors require a limitation on the number of shares to be 9.

underwritten, and (a) if such registration is the first registered offering of the Company's securities to the public, the underwriter may (subject to the allocation priority set forth below) exclude from such registration and underwriting some or all of the Registrable Securities which would otherwise be underwritten pursuant hereto, and (b) if such registration is other than the first registered offering of the sale of the Company's securities to the public, the underwriter may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting to not less than thirty percent (30%) of the securities included therein (based on aggregate market values). The Company shall so advise all holders of securities requesting registration of any limitations on the number of shares to be underwritten, and the number of shares of securities that are entitled to be included in the registration and underwriting shall (except to the extent that such allocation would reduce the number of Registrable Securities to less than 30% of the shares included in such registration) be allocated first to Other Stockholders exercising a demand or required registration right and, if a limitation on the number of shares is required, the number of shares that may be included in the registration and underwriting shall be allocated among all holders of securities requesting registration (including the holders of Registrable Securities) in proportion, as nearly as practicable, to the respective amounts of securities owned by them. Notwithstanding the foregoing provisions, the Company may withdraw any registration statement referred to in this Section 2.4 without thereby incurring any liability to the holders of Registrable Securities. If any holder of Registrable Securities disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. 2.5 Registration on Form S-3. (a) Subject to a limit of one (1) registration hereunder in any six (6) month period, if at any time (i) any holder or holders of the Registrable Securities request that the Company file a registration statement on Form S-3 or any comparable or successor form thereto for a public offering of all or any portion of the shares of Registrable Securities held by such requesting holder or holders, the reasonably anticipated aggregate price to the public of which would equal or exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3 or any comparable or successor form thereto to register such shares, then the Company shall use its best efforts to register under the Securities Act on Form S-3 or any comparable or successor form thereto, for public sale in accordance with the method of disposition specified in such notice, the number of shares of Registrable Securities specified in such notice. Whenever the Company is required by this Section 2.5 to use its best efforts to effect the registration of Registrable Securities, each of the procedures and requirements of Section 2.3, including but not limited to the requirement that the Company notify all holders of Registrable 10.

Securities from whom notice has not been received and provide them with the opportunity to participate in the offering (provided, however that holders shall have no more than fifteen (15) days to reply to the Company's notice in order to participate in the offering), shall apply to such registration, provided, however, that except as provided above, there shall be no limitation on the number of registrations on Form S-3 which may be requested and obtained under this Section 2.5. Notwithstanding any other provision of this Section 2.5, the Company shall not be obligated to register any Preferred Stock or Warrants for sale pursuant to any such registration. (b) The Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms; and to that end the Company shall register (whether or not required by law to do so) the Common Stock under the Exchange Act in accordance with the provisions of that Act following the effective date of the first registration of any securities of the Company on Form S-1 or any comparable or successor form. 2.6 Registration Procedures. If and whenever the Company is required by the provisions of Section 2.3, 2.4 or 2.5 to use its best efforts to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a registration statement (which, in the case of an underwritten public offering pursuant to Section 2.3, shall be on Form S-1 or other form of general applicability satisfactory to the managing underwriter selected as therein provided) with respect to such securities including executing an undertaking to file post-effective amendments and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified herein and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the sellers' intended method of disposition set forth in such registration statement for such period; (c) furnish to each seller of Registrable Securities and to each underwriter such number of copies of the registration statement and each such amendment and supplement thereto (in each case including all exhibits) and the prospectus included therein (including each preliminary prospectus) as such Persons 11.

reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such registration statement; (d) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the sellers of Registrable Securities or, in the case of an underwritten public offering, the managing underwriter reasonably shall request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction, unless the Company is already subject to service in such jurisdiction; (e) use its best efforts to list the Registrable Securities covered by such registration statement with any securities exchange on which the Common Stock of the Company is then listed; (f) comply with all applicable rules and regulations under the Securities Act and Exchange Act; (g) immediately notify each seller of Registrable Securities and each underwriter under such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to such seller a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (h) if the offering is underwritten and at the request of any seller of Registrable Securities, use its best efforts to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters to such effects as reasonably may be requested by counsel for the underwriters, and executed counterparts of such opinion addressed to the sellers of Registrable Securities to the same effects as requested by counsel for the underwriters, and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of 12.

such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five (5) business days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request; (i) make available for inspection by each seller of Registrable Securities, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter, reasonable access to all financial and other records, pertinent corporate documents and properties of the Company, as such parties may reasonably request, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (j) cooperate with the selling holders of Registrable Securities and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, such certificates to be in such denominations and registered in such names as such holders or the managing underwriter may request at least two business days prior to any sale of Registrable Securities; and (k) permit any holder of Registrable Securities which holder, in the sole and exclusive judgment, exercised in good faith, of such holder, might be deemed to be a controlling person of the Company, to participate in good faith in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included. For purposes of this Agreement, the period of distribution of Registrable Securities in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Registrable Securities in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby or 180 days after the effective date thereof, provided, however, in the case of any registration of Registrable Securities on Form S-3 or a comparable or successor form which are intended to be offered on a continuous or delayed basis, such 180 day-period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Securities Act governing the obligation to file a post13.

effective amendment, permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a)(3) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (y) and (z) above contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement. In connection with each registration hereunder, the sellers of Registrable Securities will furnish to the Company in writing such information requested by the Company with respect to themselves and the proposed distribution by them as shall be necessary in order to assure compliance with Federal and applicable state securities laws; and such sellers shall provide the Company with appropriate representations with respect to the accuracy of such information. 2.7 Expenses. (a) All expenses incurred by the Company in complying with Sections 2.3, 2.4 and 2.5, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of any insurance which might be obtained by the Company with respect to the offering by the Company, and fees and disbursements of one counsel selected by a majority in interest of the sellers of Registrable Securities, but excluding any Selling Expenses, are called "Registration Expenses". All underwriting discounts and selling commissions applicable to the sale of Registrable Securities are called "Selling Expenses". (b) The Company will pay all Registration Expenses in connection with each registration statement under Section 2.3, 2.4 or 2.5; provided, that, in the event of a registration pursuant to Section 2.3 hereof which is withdrawn at the request of the Investors other than as a result of the Company's failure to perform its obligations hereunder and other than as a result of a cutback by the underwriter of such registration in the amount of Registrable Securities which may be included in such registration by more than 10%, the Investors shall pay the Registration Expenses with respect to such registration, unless the holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 2.3; provided further, however, that if at the time of such withdrawal, the holders of the Registrable Securities have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the holders of the Registrable Securities at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the holders of the Registrable 14.

Securities shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 2.3. All Selling Expenses in connection with each registration statement under Section 2.3, 2,4 or 2.5 shall be borne by the participating sellers in proportion to the number of shares registered by each, or by such participating sellers other than the Company (except to the extent the Company shall be a seller) as they may agree. 2.8 Indemnification and Contribution. (a) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Section 2.3, 2.4 or 2.5, the Company will indemnify and hold harmless each holder of Registrable Securities, its officers, directors and partners, each underwriter of such Registrable Securities thereunder and each other Person, if any, who controls such holder or underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such holder, officer, director, partner, underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or' actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any prospectus, offering circular or other document incident to such registration (including any related notification, registration statement under which such Registrable Securities were registered under the Securities Act pursuant to Section 2.3, 2.4 or 2.5, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a "Blue Sky Application"), (iii) any omission or alleged omission to state in any such registration statement, prospectus, amendment or supplement or in any Blue Sky Applications executed or filed by the Company, a material fact required to be stated therein or necessary to make the statements therein not misleading, (iv) any violation by the Company or its agents of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration, or (v) any failure to register or qualify the Registrable Securities in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company (the undertaking of any underwriter chosen by the Company being attributed to the Company) will undertake such registration or qualification (provided that in such instance the Company shall not be so liable if it has used its best efforts to so register or qualify the Registrable Securities) and will reimburse each such seller, and such officer, director and partner, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with 15.

investigating or defending any such loss, claim, damage, liability or action, promptly after being so incurred, provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with written information furnished by any such holder, any such underwriter or any such controlling Person in writing specifically for use in such registration statement or prospectus. (b) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Section 2.3, 2.4 or 2.5, each seller of such Registrable Securities thereunder, severally and not jointly, will indemnify and hold harmless the Company, each Person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each other seller of Registrable Securities, each underwriter and each Person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, other seller, underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any prospectus offering circular or other document incident to such registration (including any related notification, registration statement under which such Registrable Securities were registered under the Securities Act pursuant to Section 2.3, 2.4 or 2.5, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), or any Blue Sky Application or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, other seller, underwriter and controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, promptly after being so incurred, provided, however, that such seller will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as such, furnished in writing to the Company by such seller specifically for use in such registration statement or prospectus; and provided, further, however, that the liability of each seller hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the securities sold by such seller under such registration statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the proceeds received by such seller from the sale of Registrable Securities covered by such 16.

registration statement. Notwithstanding the foregoing, it is expressly acknowledged and agreed that in accordance with the terms of the Opinion of the Maryland Attorney General (No. 86-064) dated December 1, 1986, absent insurance or already available appropriations to fund indemnification obligations of the State of Maryland, Department of Business and Economic Development ("DBED") that may arise under this Section, any and all such obligations are conditioned upon the availability of appropriations for use by DBED at the time such indemnification obligations arise. Not in limitation of the foregoing, it is understood and agreed that the indemnification obligations of any seller hereunder pursuant to any underwriting agreement entered into in connection herewith shall be limited to the obligations contained in this paragraph (b). (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 2.8 and shall only relieve it from any liability which it may have to such indemnified party under this Section 2.8 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.8 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or that the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. No indemnifying party, in the defense of any such claim or action, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or action. Each indemnified party shall furnish such information regarding 17.

itself or the claim in question as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. (d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any holder of Registrable Securities exercising rights under this Agreement, or any controlling Person of any such holder, makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such selling holder or any such controlling Person in circumstances for which indemnification is provided under this Section 2.8; then, and in each such case, the Company and such holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, and the Company is responsible for the remaining portion; provided, however, that, in any such case, (A) no such holder of Registrable Securities will be required to contribute any amount in excess of the proceeds received from the sale of all such Registrable Securities offered by it pursuant to such registration statement; and (B) no Person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person or entity who was not guilty of such fraudulent misrepresentation. (e) The indemnities and obligations provided in this Section 2.8 shall survive the transfer of any Registrable Securities by such holder. 2.9 Changes in Common Stock or Preferred Stock. If, and as often as, there is any change in the Common Stock and/or Preferred Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Common Stock and/or Preferred Stock as so changed. 2.10 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, except as provided in paragraph (c) below, at all times after ninety (90) days after any registration statement 18.

covering a public offering of securities of the Company under the Securities Act shall have become effective, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act (or any successor rule); (b) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to each holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 (or any successor rule) and, at any time after it has become subject to such reporting requirements, of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such holder to sell any Registrable Securities without registration. 2.11 "Market Stand-Off" Agreement. Each of the Investors agrees, severally and not jointly, if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by such Investor during a period not to exceed one hundred and eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act, provided that: (a) such agreement only applies to the first such registration statement of the Company including securities to be sold on its behalf to the public in an underwritten offering; and (b) all holders of Registrable Securities, Other Stockholders, officers and directors of the Company and all Persons including shares in such offering enter into similar agreements. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said period. 2.12 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a holder of Registrable Securities to a transferee or assignee of such securities who, after such assignment or transfer, holds at least 100,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations), provided the Company is, within a reasonable 19.

time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if (i) immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act and (ii) the transferee or assignee shall acknowledge in writing that the transferred or assigned Registrable Securities shall remain subject to this Agreement. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under this Section 2. 3. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company covenants and agrees that so long as any Purchaser owns any Registrable Securities, it will perform and observe the following covenants and provisions, and will cause each Subsidiary, if and when such Subsidiary exists, to perform and observe the following covenants and provisions as applicable to such Subsidiary. The following provisions supersede, amend and restate in their entirety the covenants of the Company set forth in Article V of the Series B Purchase Agreement. The Previous Investors hereby consent to the amendment and restatement of such covenants and agree that the following provisions shall supersede, amend and restate in their entirety the provisions of Article V of the Series B Purchase Agreement. 3.1 Financial Statements; Other Reports. The Company and each Subsidiary will maintain proper books of account and records in accordance with generally accepted accounting principles applied on a consistent basis, and will deliver to each Purchaser and all Investors owning at least one hundred thousand (100,000) shares of the Company's capital stock on a fully diluted basis (treating all Preferred Stock on an as converted basis, but excluding any unexercised options, warrants or purchase rights) (each, a "Rights Holder"): (a) as soon as available and in any event within thirty (30) days after the end of each month of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such month, statements of income, stockholders' equity and the related statements of cash flows of the Company for the period commencing at the end of the previous fiscal year and ending with the end of such month, setting forth in each case in comparative form the corresponding figures for the 20.

corresponding period of the preceding fiscal year and the budget for such current year, all in reasonable detail and prepared in accordance with generally accepted accounting principles consistently applied, and duly certified (subject to year-end audit adjustments) by the Chief Financial Officer of the Company; (b) as soon as available and in any event within forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and the related statements of income and stockholders' equity and of cash flows of the Company for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and the budget for such current year, all in reasonable detail and prepared in accordance with generally accepted accounting principles consistently applied, and duly certified (subject to year-end audit adjustments) by the Chief Financial Officer of the Company; (c) as soon as available and in any event within thirty (30) days after the end of each quarter of each fiscal year of the Company, a certificate executed by the President, Vice President or Chief Financial Officer of the Company stating that the Company is, and has been during such quarterly accounting period, in compliance with the terms and conditions set forth in this Agreement; (d) as soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, a copy of the annual audit report for such year for the Company, including therein a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and statements of income and stockholders' equity and of cash flows of the Company for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, all duly certified by independent public accountants of recognized standing acceptable to the Rights Holders; (e) promptly upon receipt thereof, any written report submitted to the Company by independent public accountants in connection with an annual or interim audit of the books of the Company and its Subsidiaries made by such accountants; (f) promptly after sending, making available, or filing the same, such reports and financial statements as the Company shall send or make available to the stockholders of the Company; and (g) promptly after the occurrence thereof after it becomes aware of each occurrence, notice of any event which has had a material adverse effect on the business, 21.

assets, properties, management, operations or financial condition of the Company or its Subsidiaries. Neither the foregoing provisions of this Section 3.1 nor any other provision of this Agreement shall be in limitation of any rights which an Investor may have with respect to the books and records of the Company and its Subsidiaries, or to inspect their properties or discuss their affairs, finances and accounts, under the laws of the jurisdictions in which they are incorporated. 3.2 Inspection and Other Information. Each Rights Holder and such agents, advisors and counsel as such Rights Holder may designate may, at its expense, visit and inspect any of the properties of the Company and each Subsidiary, examine the books of account of the Company and each Subsidiary, take extracts therefrom and discuss the affairs, finances and accounts of the Company and each Subsidiary with its officers and employees and public accountants (and by this provision the Company and each Subsidiary, hereby authorizes said accountants to discuss with such Rights Holder and such Persons its finances and accounts), at reasonable times with reasonable prior notice during normal business hours and provided that any person conducting such inspection sign the Company's standard form of confidentiality agreement. All such visits and inspections shall be conducted in a manner which will not unreasonably interfere with the normal business operations of the Company and each Subsidiary. The Company and each Subsidiary will furnish to each such Rights Holder such other information as it from time to time may reasonably request. 3.3 Independent Accountants. The Company will retain independent public accountants of recognized national standing approved by the Company's Board of Directors (including a majority of the Preferred Stock Directors) who shall certify the Company's consolidated financial statements at the end of each fiscal year. In the event the services of the independent public accountants, so selected, or any firm of independent public accountants hereafter employed by the Company are terminated, the Company will promptly thereafter notify the Rights Holders and will request the firm of independent public accountants whose services are terminated to deliver to the Rights Holders a letter of such firm setting forth the reasons for the termination of their services. In the event of such termination, the Company will promptly thereafter engage another such firm of independent public accountants. In its notice to the Rights Holders, the Company shall state whether the change of accountants was recommended or approved by the Board of Directors or any committee thereof. 3.4 Maintenance of Insurance. The Company and each Subsidiary will maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in 22.

which the Company operates, including, without limitation, directors' and officers' liability insurance. 3.5 Maintenance of Key-Person Life Insurance. The Company will maintain, with a financially sound and reputable insurance company or association, life insurance policies on the life of each of the President and Chief Executive Officer and each Senior Vice President in the face amounts of at least $2,000,000, with the proceeds thereof to be payable to the order of the Company. The Company will not cause or permit any assignment of the proceeds of any such policy or change in beneficiary, and will not borrow against any such policy. 3.6 Preservation of Corporate Existence. The Company and each Subsidiary will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is necessary or desirable in view of its business and operations or the ownership of its properties. The Company and each Subsidiary shall preserve and maintain all licenses and other rights to use patents, processes, licenses, trademarks, trade names, inventions, intellectual property rights or copyrights owned or possessed by it and necessary to the conduct of its business. 3.7 Compliance with Laws. The Company will comply, and cause each of its Subsidiaries to comply, with all applicable laws, rules, regulations and orders of any governmental authority, noncompliance with which could have a material adverse effect on its business or condition, financial or otherwise, including without limitation, in a manner such that the representation and warranty set forth in 2.5(c) of the Purchase Agreement shall remain true and accurate. 3.8 Compensation. The Company and each Subsidiary shall pay to its management compensation which is not in excess of compensation customarily paid to management in companies of similar size, of similar maturity, and in similar business and all management compensation and all policies relating thereto, shall be approved in advance by the Compensation Committee of the Board of Directors (including a majority of the Preferred Stock Directors). 3.9 New Developments. The Company and each Subsidiary will cause all technological developments, patentable or unpatentable inventions, discoveries or improvements by their officers, employees or consultants to be documented in accordance with appropriate professional standards, cause all officers, employees and consultants to execute appropriate patent and copyright assignment agreements to the Company and such Subsidiary, as the case may be, and, where possible and appropriate, cause all officers, employees and consultants to file and execute United States and foreign patent or 23.

copyright applications relating to and protecting such developments on behalf of the Company or such Subsidiary. 3.10 Agreements of Officers and Employees. The Company and each Subsidiary will cause each officer, employee and consultant now or hereafter employed to execute and deliver a Proprietary Information and Inventions Agreement in the form attached to the Purchase Agreement, or as otherwise approved by the Board of Directors of the Company. 3.11 Bylaws; Meetings and Indemnification. The Company shall cause its Bylaws to provide that, unless otherwise required by the laws of the jurisdiction of its incorporation (i) any one director or (ii) any holder or holders of at least ten percent (10%) of the outstanding shares of the Company, treating all Preferred Stock on an as converted basis, shall have the right to call a special meeting of the Board of Directors or stockholders, respectively. The Company shall at all times maintain provisions in its Bylaws or charter indemnifying all directors against liability and providing for the advancement of expenses to the maximum extent permitted under the laws of the jurisdiction of its incorporation. 3.12 Meetings of Directors and Committees; Expenses of Directors. The Company shall hold meetings of the Company's Board of Directors not less frequently than six times during any calendar year. The Company shall promptly reimburse in full each director of the Company for all of his or her reasonable out-of-pocket expenses incurred in attending each meeting of the Board of Directors of the Company or any committee thereof or in connection with any special project. 3.13 Rule 144A Information. The Company covenants and agrees that, at all times during which the Company is neither subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will provide in written form (as promptly as practicable and in any event within fifteen (15) business days), upon the written request of any Rights Holder or a prospective buyer of shares of Preferred Stock or shares issuable upon conversion thereof from any Rights Holder, all information required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the Commission under the Securities Act ("Rule 144A Information"). The Company further covenants, upon written request, to cooperate with and assist any Rights Holder or any member of the National Association of Securities Dealers, Inc. system for Private Offerings Resales and Trading through Automated Linkage ("PORTAL") in applying to designate and thereafter maintain the eligibility of the shares of Preferred Stock or shares issuable upon conversion thereof for trading through PORTAL. The Company's obligations under this Section 3.13 shall at all times be contingent upon the relevant Rights Holders obtaining from a prospective purchaser an agreement to take all reasonable precautions to safeguard 24.

the Rule 144A Information from disclosure to anyone other than a Person who will assist such purchaser in evaluating the purchase of such securities. 3.14 Stock Plan. The Company has reserved an aggregate of Two Million (2,000,000) shares of Common Stock or such additional number of shares of Common Stock as authorized by the Board of Directors (including the Preferred Stock Directors) for issuance to employees, directors, officers and consultants of the Company pursuant to the Stock Plan. All options to be granted (or stock issued directly) under the Stock Plan or otherwise shall vest and become exercisable in equal annual installments over a four year period and be subject to a right of refusal of the Company, unless otherwise approved by the Compensation Committee of the Board of Directors. 3.15 Prompt Payment of Taxes, Etc. The Company and each Subsidiary will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company or any Subsidiary; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company or such Subsidiary shall have set aside on its books adequate reserves with respect thereto, and provided, further, that the Company and each Subsidiary will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor. The Company and each Subsidiary will promptly pay or cause to be paid when due, or in conformance with customary trade terms, all other indebtedness incident to operations of the Company and each Subsidiary. 3.16 Maintenance of Properties and Leases. The Company will keep its properties and those of its Subsidiaries in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and the Company and its Subsidiaries will at all times comply with each provision of all leases to which any of them is a party or under which any of them occupies property if the breach of such provision might have a material adverse effect on the condition, financial or otherwise, or operations of the Company or such Subsidiary. 3.17 Availability of Common Stock. The Company will, from time to time, in accordance with the laws of the state of its incorporation, increase the authorized amount of Common Stock if at any time the number of shares of Common Stock remaining unissued and available for issuance shall be insufficient to permit conversion of all the then outstanding shares of Preferred Stock. 25.

3.18 Notice of Record Dates. In the event of any taking by the Company of a record of the holders of any class of securities (other than the Preferred Stock) for the purpose of determining the holders thereof who are entitled to receive any dividend or other Distribution (defined below), the Company shall mail to each Rights Holder at least ten (10) days prior to such record date, specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or Distribution. 3.19 Right of First Refusal. The Company and each employee or officer of the Company who hereafter acquires shares of the Company's capital stock from the Company, or any option or right to acquire shares of the Company's capital stock from the Company, shall enter into (if they have not already done so) an agreement in such form as approved by the Board of Directors which agreement shall provide the Company with a right of first refusal to purchase all or a portion of such shares in the event such employee or officer of the Company desires to sell such shares. 3.20 Investments. The Company and its Subsidiaries shall not make or permit to remain outstanding any Investments unless such Investments are approved by the Board of Directors. 3.21 Termination of Affirmative Covenants. The covenants set forth in this Section 3 shall be of no further force or effect upon the consummation of an Initial Public Offering. 4. NEGATIVE COVENANTS. Without limiting any other covenants or provisions hereof, the Company covenants and agrees that it will comply with and observe the following negative covenants and provisions, and will cause each Subsidiary to comply with and observe such of the following covenants and provisions as are applicable to such Subsidiary, if and when such Subsidiary exists, and will not without the written consent or written waiver of the holders of at least 66 2/3 % of the outstanding shares of Preferred Stock, do any of the actions set forth in the following covenants and provisions. The following provisions supersede, amend and restate in their entirety the covenants of the Company set forth in Article VI of the Series B Purchase Agreement. The Previous Investors hereby consent to the amendment and restatement of such covenants and agree that the following provisions shall supersede, amend and restate in their entirety the provisions of Article VI of the Series B Purchase Agreement. 4.1 Liens. Neither the Company nor any Subsidiary will create, incur, assume or suffer to exist any lien of any nature, upon or with respect to any of its properties, now owned or hereinafter acquired, or assign or otherwise convey any right to receive income, except Permitted Liens. 26.

4.2 Change in Business; Merger and Sale of Assets. The Company will not permit any change in the nature of the business of the Company or any Subsidiary or merge or consolidate with any other Person or sell, assign, lease or otherwise dispose of substantially all of its assets, in one transaction or in a series of transactions. 4.3 Distributions; Section 305. Neither the Company nor any Subsidiary will purchase, redeem, retire, or otherwise acquire for value any shares of its capital stock (or rights, options or warrants to purchase such shares) now or hereafter outstanding, return any capital to its stockholders (such transactions being hereinafter referred to as "Distributions"), and neither the Company nor any Subsidiary shall declare or pay any dividends or make any distribution of assets to its stockholders as such, except for (i) dividends on the Preferred Stock paid out of earnings; (ii) repurchases from employees, directors, officers or consultants at the original purchase price of the shares pursuant to stock repurchase agreements and similar vesting agreements approved by the Board of Directors; (iii) to the Company; and (iv) repurchases pursuant to that certain Stock Repurchase Agreement, dated as of April 2, 1996, by and between the Company and the State of Maryland/Department of Business and Economic Development. The Company shall not enter into any transaction which would result in a dividend on Preferred Stock under Section 305 of the Code (or any successor provision) other than dividends accruing pursuant to the Certificate of Incorporation, as amended and restated from time to time. 4.4 Dealings with Affiliates. Except for existing agreements identified in Schedule 2.21 to the Purchase Agreement, neither the Company nor any Subsidiary will enter into any transaction or agreement other than indemnification and employment transactions in the ordinary course of the Company's business with any employee, officer or director or any member of their families, or any corporation or other entity in which any one or more of such persons holds, directly or indirectly, five percent (5 %) or more of any class of capital stock, or with any other affiliate of the Company, except agreements and transactions on terms no less favorable to the Company or any Subsidiary than it would obtain in a transaction between unrelated parties, and then only if such agreements or transactions are approved by the disinterested members of the Board of Directors. 4.5 Transfers of Technology. Neither the Company nor any Subsidiary will transfer any ownership or interest in, or material rights relating to, any of its intellectual property rights to any Person, except pursuant to licensing agreements and other transfers made in the ordinary course of business and approved by the Board of Directors. 4.6 Restrictive Agreements Prohibited. Neither the Company nor any of its Subsidiaries shall become a party to any agreement which by its terms restricts the Company's performance of this Agreement, the Purchase Agreement, the Amended and 27.

Restated Stockholders Agreement or the Certificate of Incorporation, as amended and restated from time to time, provided, however, that nothing in this Section 4.5 shall prohibit any amendment of or waiver of any provision of this Agreement, the Purchase Agreement, the Amended and Restated Stockholders Agreement or the Certificate of Incorporation if such amendment or waiver is in accordance with the applicable provisions of this Agreement, such other agreements, the Certificate of Incorporation, as amended and restated from time to time, or the Delaware General Corporation Law. 4.7 Mergers, Sale of Assets, Etc. of Subsidiaries. The Company shall not permit any Subsidiary to consolidate or merge into or with or sell or transfer all or substantially all its assets, except that any Subsidiary may (i) consolidate or merge into or with or sell or transfer assets to any other Subsidiary, or (ii) merge into or sell or transfer assets to the Company. 4.8 Maintenance of Ownership of Subsidiaries. The Company shall not sell or otherwise transfer any shares of capital stock of any Subsidiary, except to the Company or another Subsidiary, or permit any Subsidiary to issue, sell or otherwise transfer any shares of its capital stock or the capital stock of any Subsidiary, except to the Company or another Subsidiary. 4.9 Securities of Other Persons. Except as set forth on Schedule 2.2 to the Purchase Agreement neither the Company nor any Subsidiary shall purchase any stock or other securities of any Person, unless such Person is wholly-owned. 4.10 U.S. Real Property Holding Corporation. The Company will not be a "United States real property holding corporation", as defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations promulgated by the Internal Revenue Service and upon written request, will provide to any holder of Preferred Stock a statement to the effect informing such holder whether such interest constitutes a U.S. real property interest. 4.11 Termination of Negative Covenants. The covenants set forth in this Section 4 shall be of no further force or effect upon the consummation of an Initial Public Offering. 5. MISCELLANEOUS. 5.1 Successors and Assigns. All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective heirs, successors (including, without limitation, by sale or transfer of all or substantially all assets, merger or consolidation) and assigns of the parties hereto (including without limitation transferees of any Registrable Securities), whether so expressed or not. 28.

5.2 Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid: (a) if to the Company or any other party hereto, at the address of such party set forth in the Purchase Agreement by and among the parties hereto dated as of the date hereof; (b) if to any subsequent holder of Registrable Securities, to it at such address as may have been furnished to the Company in writing by such holder; or (c) in any case, to such other address or addresses as shall have been furnished in writing to the Company (in the case of a holder of Registrable Securities) or to the holders of Registrable Securities (in the case of the Company) in accordance with the provisions of this paragraph. All notices, requests, consents and other communications hereunder shall be deemed to have been given (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day (or if sent overseas, on the second business day) following the day such notice is delivered to the courier service, or (iv) if sent by registered or certified mail, on the 5th business day (or if sent overseas, on the 10th business day) following the day such mailing is made, provided, however, that the reports required by Section 2.10 (c) may be mailed by first-class regular mail, postage prepaid, if mailed to an address in the United States. 5.3 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of the State of Delaware, without giving effect to the conflict of law principles thereof. 5.4 Modifications and Amendments. This Agreement may not be amended or modified, and no provision hereof may be waived, without the written consent of the Company and the holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of Registrable Securities. Any waiver or consent hereunder shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent. Notwithstanding the foregoing, Exhibit B may be amended by the Company without the consent of any holders in order 29.

to reflect an additional Purchaser in accordance with Section 1.2 of the Purchase Agreement. 5.5 Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 5.6 Limitation on Subsequent Registration Rights. The Company shall not grant to any third party any registration rights more favorable than, or in any way conflicting with, any of those contained herein, so long as any of the registration rights under this Agreement remains in effect, provided, in any event, (i) any grant of demand or required registration rights shall provide that the Investors have incidental or "piggyback" registration rights with respect thereto in accordance with the provisions of Section 2.4 hereof, and (ii) such rights shall not become effective prior to the rights of the holders of Registrable Securities hereunder. 5.7 Severability. In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. 5.8 Injunctive Relief. The Company recognizes that the rights of the Investors under this Agreement are unique and, accordingly, the Investors shall, in addition to such other remedies as may be available to them at law or in equity, have the right to enforce their rights hereunder by actions for injunctive relief and specific performance to the extent permitted by law. This Agreement is not intended to limit or abridge any rights of the Investors which may exist apart from this Agreement. 5.9 Legal Review; Interpretation. The parties hereto acknowledge and agree that: (i) each party and its counsel, if so represented, reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; and (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement. 5.10 Heading and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof. 30.

5.11 Delays or Omissions. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. 5.12 Jurisdiction And Service Of Process. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of Maryland or of the United States of America for the District of Maryland. By execution and delivery of this Agreement, each of the parties hereto accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to the party at its address set forth in Section 5.2 hereof. 5.13 Gender. Wherever this Agreement refers to the neuter gender such reference shall include the masculine and feminine genders as the context may require. 5.14 New York Life Insurance Company Compliance Obligations. Nothing in this Agreement shall diminish the continuing obligations of New York Life Insurance Company to comply with applicable requirements of law that it maintain responsibility for the disposition of, and control over its admitted assets, investments and property, including (without limiting the generality of the foregoing) the provisions of Section 1411(b) of the New York Insurance Law, as amended, and as hereinafter from time to time in effect. 31.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed by their duly authorized representatives as of the date first written above. Very truly yours, GENE LOGIC INC.
By: /s/ Michael J. Brennan --------------------------------------Michael J. Brennan, President and Chief Executive Officer

Counterpart Signature Pages Beginning on the Next Page 32.

COUNTERPART SIGNATURE PAGE The undersigned hereby agrees to become a party to that certain Amended and Restated Investor Rights Agreement dated as of July 15, 1997 (the "Agreement") among Gene Logic Inc. (the "Company") and others. From and after the undersigned's execution and delivery and the Company's acceptance of this Counterpart Signature Page, the undersigned shall be a party to the Agreement and shall be deemed to be an "Investor" for all purposes of the Agreement.

Printed Name of Investor

Signature of Investor By: Title: Address:

Date: Agreed and accepted: GENE LOGIC INC. By: Title: Date: 33.

EXHIBIT A PREVIOUS INVESTORS Larry Abrams 24 Central Park South New York, NY 10019 Altamira Pooled U.S. Equity Fund 250 Bloor Street West, Ste. 300 Toronto M4W 1E6 Canada Attn: Ian Ainsworth Altamira Science & Technology Fund 250 Bloor Street West, Ste. 300 Toronto M4W 1E6 Canada Attn: Ian Ainsworth Altamira Special Growth Fund 250 Bloor Street West, Ste. 300 Toronto M4W 1E6 Canada Attn: Sue Coleman The Connecticut Future Fund L.P. c/o Cullinane & Donnelly 265 Church St., Ste. 1004 New Haven, CT 06510-7014 Attn: John Cullinane Cross Atlantic Partners K/S c/o Gorrissen & Federspiel 12 H.C. Andersens Blvd. Copenhagen, Denmark Cross Atlantic Partners II K/S c/o Gorrissen & Federspiel 12 H.C. Andersens Blvd. Copenhagen, Denmark

E.J. Financial Investments L.P. 225 East Deerpath, Ste. 250 Lake Forest, Illinois 60045 Attn: Dr. Mahendra Shah Evolution Partners, II 2 North LaSalle, Ste. 400 Chicago, Illinois 60606 Attn: Fred Holobow GIMV Investment Corporation Karel Ooomsstraat 37 B-2018 Antwerpen Belgium Attn: Patrick Van Beneden James Ginsburg 900 Bluff Street Glencoe, IL 60022 Steven Helms 1111 West Drummond Place Chicago, IL 60614 New York Life Insurance Company 51 Madison Avenue New York, NY 10010 Attn: Richard F. Drake OxCal Venture Fund L.P. 617 El Medio Ave. Pacific Palisades, CA 90272 c/o Stevan Birnbaum Oxford Bioscience Partners (Bermuda) Limited Partnership 315 Post Road West Westport, CT 06880 Attn: Dr. Alan G. Walton

Oxford Bioscience Partners, L.P. 315 Post Road West Westport, CT 06880 Attn: Dr. Alan G. Walton Oxford Bioscience Partners (Adjunct) L.P. 315 Post Road West Westport, CT 06880 Attn: Dr. Alan G. Walton Sanctus Spiritus Antilles N.V. c/o Intertrust (Antilles) N.V. Lanhuis Joonchi Kaya Richard J. Beaujon 3/n P.O. Box 837 Curacao, Netherlands Antilles Attn: Gregory E. Elias State of Maryland Dept. of Business & Economic Development, Investment Financing Group 217 E. Redwood Street, 22nd Floor Baltimore, MD 21202

EXHIBIT B PURCHASERS Name Altamira, Management Ltd. Biotechvest L.P. Cresta Limited Cross Atlantic Partners K/S Cross Atlantic Partners II K/S Cross Atlantic Partners III K/S E.J. Financial Enterprises, Inc. Four Partners Fruit of the Loom, Inc. GeneChem Technologies Venture Fund L.P. GIMV Investment Corporation James Ginsburg Glenbrook Capital L.P. Goldman Sachs Group L.P. H & Q Gene Logic Investors L.P. Steve Helms Niederhoffer Global Systems, S.A. Niederhoffer Friends Partnership L.P. Niederhoffer Intermarket Fund L.P. New York Life Insurance Company OxCal Venture Fund L.P. Oxford Bioscience Partners L.P. Oxford Bioscience Partners (Adjunct) L.P. Oxford Bioscience Partners (Bermuda) Limited Partnership

Pensionskassen for Vaerkstedsfunktionaerer i Jernit Sanctus Spiritus (Antilles) N.V. WPG - Farber, Weber Fund, L.P. WPG - Farber, Weber Overseas, L.P.

Exhibit 10.12 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of October 31, 1995 by and between GENE LOGIC INC., a Delaware corporation (the "Company") and MICHAEL J. BRENNAN, a Maryland resident ("Brennan"). RECITALS: A. The Company desires to secure the services of Brennan and Brennan desires to perform such services for the Company on the terms and conditions as set forth in this Agreement. NOW, THEREFORE, in consideration of these premises and the mutual promises and conditions contained in this Agreement, the parties hereto hereby agree as follows: 1. Employment and Duties. Subject to the terms and conditions of this Agreement, the Company shall employ Brennan as President and Chief Executive Officer of the Company and shall elect Brennan as a director of the Company and Brennan hereby accepts such employment and such positions. Brennan shall devote his full time, ability, attention, knowledge and skill to performing all duties as President and Chief Executive Officer of the Company as set forth in the Bylaws of the Company and as lawfully assigned or delegated to him by the directors of the Company. 2. Base Salary. In consideration for Brennan's services to the Company during the term of his employment under this Agreement, Brennan shall receive an annual base salary of $200,000 during 1996 and $210,000 during 1997, and thereafter in such amounts as may be mutually agreed by the Company and Brennan, but not less than $210,000 per calendar year. Base salary shall be paid in equal bi-weekly installments from which the Company shall withhold and deduct all applicable federal and state income, social security, disability and other taxes as required by applicable laws. 3. Incentive Stock. In addition to the salary specified above, the Company shall provide Brennan with stock incentives as follows: 3.1 Founders' Stock. Upon the date of signing of this Agreement, the Company shall sell to Brennan and Brennan shall purchase 100,000 shares of the Company's common stock at a purchase price of $0.01 per share. Unrestricted ownership of such shares shall vest according to the following schedule: twenty-five percent (25%) upon the date of signing of this Agreement and thereafter at a rate of 1/36th each month for 36 months beginning upon the first anniversary of such date. The Company shall deliver to Brennan the certificates representing vested shares within 30 days of the date upon which vesting occurs; certificates representing unvested shares shall be held in escrow by the Secretary of the Company. Any unvested stock shall automatically become fully vested upon the date upon which a registration statement for the sale of securities of the Company to the public becomes effective, or upon any merger of the Company or sale of the Company or all or substantially all of its assets. 3.2 Incentive Stock Options. Upon the date of signing of this Agreement, the Company shall grant to Brennan incentive stock options under the Company's Incentive Stock Option Plan to purchase 40,000 shares of the Company's common stock at a purchase

price of $0.01 per share. The incentive stock options shall become exercisable according to the following schedule: twenty-five percent (25%) upon the date of signing of this Agreement and thereafter at a rate of 1/36th each month for 36 months beginning upon the first anniversary of such date. The Company will grant further incentive stock options to Brennan in each year during which this Agreement remains in force, in numbers consistent with Brennan's position as President and CEO of the Company. Any unexercisable options held by Brennan pursuant to this Subsection 3.2 shall automatically become exercisable upon the date upon which a registration statement for the sale of securities of the Company to the public becomes effective, or upon any merger of the Company or sale of the Company or all or substantially all of its assets. 3.3 Effect of Termination by Brennan. In the event Brennan terminates this Agreement prior to its first anniversary, except in consequence of a breach of this Agreement by the Company, all vested stock shall become unvested and the Company shall have the right to repurchase any shares of the Company's stock acquired by Brennan under either Subsection 3.1 or 3.2 above, such repurchase to occur at a purchase price equal to Brennan's original purchase price for such shares. 3.4 Right to Participate in Offerings of Securities. The Company shall further permit Brennan to invest on a pro rata basis in any future offerings of the Company's securities, for which purposes "pro rata basis" shall mean the right to acquire that number of the to-be-issued securities represented by the ratio, calculated immediately prior to the offering, of stock held by Brennan (whether vested or not) to the Company's outstanding stock both on a fully-diluted, as-if-converted basis multiplied by the total number of shares or other securities proposed to be issued in the offering, or such lesser number as Brennan may elect. This right shall not apply to securities issued (a) upon conversion of any convertible preferred shares, (b) as a common stock dividend or upon any subdivision of shares of common stock, (c) pursuant to a firm commitment underwritten public offering, or (d) pursuant to the exercise of options to purchase common stock granted to employees, directors, officers, consultants or advisers of the Company or members of the Company's Scientific Advisory Board. 4. Additional Compensation and Benefits. 4.1 Signing Bonus. Upon the execution of this Agreement, the Company shall pay to Brennan a cash signing bonus in the amount of $50,000. In addition, the Company shall issue to Brennan, without receiving monetary consideration therefore, 50,000 shares of preferred stock at the time of closing of the next private round of venture financing (presently proposed to be the Series B round, closing on or before May 31, 1996). Such shares shall be fully-paid and non-assessable and shall have all the rights and preferences of the securities issued to the other investors in such financing and Brennan shall be accorded all such rights as are accorded to other investors under the terms of any Convertible Preferred Stock Purchase Agreement which may be executed by and between the Company and subscribers to the offering. 4.2 Annual Performance Bonus. During each calendar year during the term of this Agreement commencing with 1996, Brennan shall receive, in addition to the base salary specified in Section 2 above, a performance bonus based upon achievement of goals with respect to financing of the Company, establishment of a corporate base for the Company and progress in building the Company, such goals for 1996 to be mutually agreed by Brennan and the Company and set forth promptly following execution of this Agreement in a side letter which shall thereafter become Exhibit A to this Agreement and, with respect to each year during the term of this Agreement after 1996, to be mutually agreed upon by Brennan and the Company not 2

later than sixty (60) days prior to the commencement of such year. The amount of such bonuses shall be $30,000 for 1996, $50,000 for 1997, and thereafter in such amounts as may be mutually agreed by the Company and Brennan, but not less than $50,000 per calendar year. 4.3 Relocation Expenses. In the event that Brennan relocates his family, the Company shall pay all reasonable moving expenses and other costs related to such relocation, including without limitation the closing costs on the sale of Brennan's existing house and the purchase of a new home of similar value, including without limitation up to three (3) points on the new mortgage for such purchase. 4.4 Medical Benefits, Vacation and Sick Leave. Commencing on January 1, 1996, Brennan shall be entitled to participate in such medical, health and life insurance plans as the Company may from time to time implement, and to receive paid vacation and sick leave on the same basis as the Company's other senior executives. 4.5 Pension Plan. Brennan shall be entitled to participate as a beneficiary under such pension plan(s) as the Company may from time to time adopt, on the same basis as the Company's other senior executives. 5. Confidentiality and Proprietary Inventions Agreement. Upon the commencement of the term of this Agreement, Brennan shall enter into the Company's standard form of agreement relating to the treatment of the Company's confidential information and ownership of proprietary inventions. 6. Term of Employment. Subject to the provisions of Section 7, the term of the employment engaged by this Agreement shall be a period of five (5) years commencing on December 1, 1995 and ending on December 31, 2000, whereupon the term shall automatically renew for successive one (1) year periods unless one of the parties to the Agreement shall have given notice of its intention to terminate the Agreement not later than ninety (90) days prior to the end of such initial term or any such renewal term. 7. Termination of Employment. 7.1 For Cause. The Company may terminate this Agreement, effective immediately upon written notice to Brennan, if at any time, in the reasonable opinion of the Company's Board of Directors, (a) Brennan commits any material act of dishonesty, fraud or embezzlement with respect to the Company or any subsidiary or affiliate thereof, (b) is convicted of a crime of moral turpitude, or (c) breaches any material obligation under this Agreement. The Company's total liability to Brennan in the event of termination of Brennan's employment under this Subsection 7.1 shall be limited to the payment of Brennan's salary and benefits through the effective date of termination. 7.2 Without Cause. The Company may terminate this Agreement without cause upon sixty (60) days' written notice to Brennan. Upon any termination of this Agreement without cause by the Company, the Company shall pay to Brennan as severance pay an amount equal to Brennan's total combined base salary and performance bonus for that calendar year during which the termination becomes effective, in addition to such other compensation to which Brennan may be entitled prior to the date of termination. 3

7.3 By Brennan. Brennan reserves the right to terminate his employment hereunder for any reason upon ninety (90) days' written notice to the Company. The Company's total liability to Brennan in the event of termination of Brennan's employment under this Subsection 7.3 shall be limited to the payment of Brennan's salary and benefits through the effective date of termination and the provisions of Subsection 7.2 shall not apply. 8. Confirmation of Equity Structure. The Company represents and warrants that the equity table attached to this Agreement as Exhibit B accurately describes the current capital structure of the Company on a fully-diluted basis and that there are no shares, options, warrants, commitments, conversion rights or agreements for the purchase of any shares of the Company's capital stock or other securities of the Company not shown on Exhibit B. 9. Miscellaneous. 9.1 Modification. Any modification of this Agreement shall be effective only if reduced to writing and signed by the parties to be bound thereby. 9.2 Entire Agreement. This Agreement constitutes the entire agreement between the Company and Brennan pertaining to the subject matter hereof and supersedes all prior or contemporaneous written or verbal agreements and understandings between the parties in connection with the subject matter hereof. 9.3 Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way. 9.4 Waiver. The parties hereto shall not be deemed to have waived any of their respective rights under this Agreement unless the waiver is in writing and signed by the waiving party. No delay in exercising any right shall be a waiver of such right nor shall a waiver of any right on one occasion operate as a waiver of such right on a future occasion. 9.5 Costs of Enforcement. If any action or proceeding shall be commenced to enforce this Agreement or any right arising in connection with this Agreement, each party shall initially bear its own costs and legal fees associated with such action or proceeding. The prevailing party in any such action or proceeding shall be entitled to recover from the other party the reasonable attorneys' fees, costs and expenses incurred by such prevailing party in connection with such action or proceeding. 4

9.6 Notices. All notices provided for herein shall be in writing and delivered personally or sent by United States mail, registered or certified, postage paid, addressed as follows:
To the Company: Gene Logic, Inc. Five Science Park New Haven, CT 06511 Michael J. Brennan 9908 Conestoga Way Potomac, MD 20854

To Brennan;

or to such other addresses as either of such parties may from time to time designate in writing. Any notice given under this Agreement shall be deemed to have been given on the date of actual receipt, or, if not received during normal business hours, on the next business day. IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized officers or agents as of the date first written above.
"Company" GENE LOGIC INC. a Delaware corporation By: /s/ Alan G. Walton -------------------------Name: Dr. Alan G. Walton ------------------------Title: Chairman, Board of Directors ---------------------------"Employee" /s/ Michael J. Brennan ---------------------Dr. Michael J. Brennan

5

Exhibit 10.13 AMENDMENT TO EMPLOYMENT AGREEMENT THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made and entered into as of July 9, 1997, by and between GENE LOGIC INC., a Delaware Corporation (the "Company"), and MICHAEL J. BRENNAN ("Executive"). WHEREAS, the Company and Executive previously entered into an Employment Agreement dated December 1, 1995 (the "Employment Agreement") which, among other things, provides for the automatic vesting of all outstanding options to purchase the Company's Common Stock held by the Executive upon a change of control of the Company (the "Vesting Provision") and that Executive may participate in future equity securities offerings by the Company (the "Participation Right") ; and WHEREAS, the Company and Executive desire to amend the Employment Agreement to amend and restate the Vesting Provision and to terminate the Participation Right upon an initial public offering of the Company's Common Stock. NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements set forth below, hereby agree to amend the Employment Agreement as follows: 1. Restatement of Vesting Provision. Section 3.2 of the Employment Agreement shall be amended and restated to read in its entirety as follows: "3.2 Incentive Stock Options. Upon the date of signing of this Agreement, the Company shall grant Brennan incentive stock options under the Company's Incentive Stock Option Plan to purchase 40,000 shares of the Company's common stock at a purchase price of $0.01 per share. The incentive stock options shall become exercisable according to the following schedule: twenty-five percent (25%) upon the date of signing of this Agreement and thereafter at a rate of 1/36th each month for 36 months upon the first anniversary of such date. The Company will grant further incentive stock options to Brennan in each year during which this Agreement remains in force, in numbers consistent with Brennan's position as President and CEO of the Company. In the event of: (i) a merger or consolidation of the Company with another corporation, not including any merger or consolidation if immediately thereafter the stockholders of the Company immediately before such transaction own shares representing more than 50% of the outstanding voting securities of the surviving corporation, (ii) a sale of shares by the stockholders of the Company if immediately thereafter the stockholders of the Company immediately before such sale own shares representing less than 50% of the outstanding voting securities of the surviving corporation, or (iii) a sale of all or substantially all of the Company's assets, all 1.

options to purchase Common Stock of the Company held by Brennan that have not previously vested under the terms of the applicable Option Agreements shall vest immediately upon the closing of such transaction. In the event of an underwritten initial public offering of the Company's Common Stock, to the extent at least 80% of the aggregate of the shares subject to outstanding options to purchase Common Stock of the Company held by Brennan (other than any such options granted immediately prior to and in contemplation of such initial public offering) have not previously vested under the terms of the applicable Option Agreements, then the vesting of such options shall be accelerated such that 80% of the shares subject to each such option shall be vested as of the closing of such initial public offering and the remaining 20% of the shares subject to each such option shall vest 180 days from the closing of such initial public offering. If, in the event of an underwritten initial public offering of the Company's Common Stock, 80% or more of the aggregate of the shares subject to outstanding options to purchase Common Stock of the Company held by Brennan (other than any such options granted immediately prior to and in contemplation of such initial public offering) have previously vested, then any remaining unvested shares subject to such options shall vest 180 days from the closing of such initial public offering. 2. Termination Of Participation Right Upon Initial Public Offering. The following shall be added at the end of Section 3.4 of the Employment Agreement to amend such section: "Notwithstanding anything to the contrary herein, Brennan's right to invest in any future offerings of the Company hereunder shall terminate automatically upon the closing of the Company's initial public offering of its securities to the public." 3. Effective Date. This Amendment shall be effective as of the date of the Employment Agreement. Except as amended herein, or as otherwise agreed to in writing by the Company and Executive, all terms of the Employment Agreement shall remain in full force and effect. 2.

IN WITNESS WHEREOF, the parties have executed this Amendment to Employment Agreement as of the date first above written. THE COMPANY: EXECUTIVE: GENE LOGIC INC. a Delaware Corporation
By: Name: Title: /s/ Mark D. Gessler ------------------------Mark D. Gessler ------------------------Vice President, Corporate Development and CFO /s/ Michael J. Brennan ------------------------------Michael J. Brennan

3.

Exhibit 10.14 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of May 16, 1996 by and between GENE LOGIC INC., a Delaware corporation (the "Company") and MARK D. GESSLER, a Texas resident ("Gessler"). RECITALS: The Company desires to secure the services of Gessler and Gessler desires to perform such services for the Company on the terms and conditions as set forth in this Agreement. NOW, THEREFORE, in consideration of these premises and the mutual promises and conditions contained in this Agreement, the parties hereto hereby agree as follows: 1. Employment and Duties. Subject to the terms and conditions of this Agreement, the Company shall employ Gessler as Senior Vice President, Corporate Development and Chief Financial Officer of the Company and Gessler hereby accepts such employment and such positions. Gessler shall devote his full time, ability, attention, knowledge and skill to performing all duties as Senior Vice President, Corporate Development and Chief Financial Officer of the Company as lawfully assigned or delegated to him by the Chief Executive Officer of the Company. 2. Base Salary. In consideration for Gessler's services to the Company during the term of his employment under this Agreement, Gessler shall receive an annual base salary of $170,000 during 1996, and thereafter in such amounts as may be mutually agreed by the Company and Gessler, but not less than $170,000. Base salary shall be paid in equal, bi-weekly installments from which the Company shall withhold and deduct all applicable federal and state income, social security, disability and other taxes as required by applicable laws. 3. Incentive Stock. In addition to the salary specified above, the Company shall provide Gessler with stock incentives as follows: 3.1 Founders' Stock. On or before June 30, 1996, the Company shall sell to Gessler and Gessler shall purchase 75,000 shares of the Company's common stock at a purchase price of $0.15 per share. Unrestricted ownership of such shares shall vest through a declining buy-back right of the Company according to the following schedule: twenty-five percent (25%) upon the date of signing of this Agreement and thereafter at a rate of 1/36th each month for 36 months beginning upon the first anniversary of such date. Any unvested stock shall automatically become fully vested upon the date upon which a registration statement for the sale of securities of the Company to the public becomes effective, or upon any merger of the Company or sale of the Company or all or substantially all of its assets. 3.2 Incentive Stock Options. The Company will grant incentive stock options to Gessler in each year during which this Agreement remains in force, in numbers consistent with Gessler's position as Senior Vice President, Corporate Development and Chief Financial Officer of the Company. Such incentive stock options shall become exercisable according to the schedule established by the Board of Directors for the Company's Incentive Stock Option Plan. Any unexercisable options held by Gessler pursuant to this Subsection 3.2 shall automatically become exercisable upon the date upon which a registration statement for the Page 1

sale of securities of the Company to the public becomes effective, or upon any merger of the Company or sale of the Company or all or substantially all of its assets. 3.3 Effect of Termination by Gessler. In the event Gessler terminates this Agreement prior to its first anniversary, all vested stock shall become unvested and the Company shall have the right to repurchase any shares of the Company's stock acquired by Gessler under either Subsection 3.1 or 3.2 above, such repurchase to occur at a purchase price equal to Gessler's original purchase price for such shares. 4. Additional Compensation and Benefits. 4.1 Signing Bonus. Upon the execution of this Agreement, the Company shall pay to Gessler a cash signing bonus in the amount of $20,000. 4.2 Annual Performance Bonus. During each calendar year while this Agreement remains in force, commencing with 1996, Gessler shall receive, in addition to the base salary specified in Section 2 above, a performance bonus based upon achievement of goals mutually agreed by Gessler and the Chief Executive Officer of the Company. The amount of such bonus for 1996 shall be $20,000 in cash and, in addition, the Company shall, prior to the end of 1996, grant to Gessler incentive stock options under the Company's Incentive Stock Option Plan to purchase an additional 25,000 shares of the Company's common stock at a purchase price per share equal to then fair market value, such options to become exercisable according to the same schedule as described under Subsection 3.1 above. Thereafter any annual cash bonus shall be in such amount as may be mutually agreed by the Company and Gessler, but not less than $20,000. 4.3 Relocation Expenses and Allowances. The Company shall reimburse Gessler on a tax grossed-up basis for all reasonable moving expenses, temporary accommodation and house-hunting expenses and other costs related to his relocation to the vicinity of the Company's headquarters, including seller's closing costs on the sale of Gessler's existing house and purchaser's closing costs on the purchase of a new home of similar value, including up to three (3) points on the new mortgage for such purchase. In connection with his relocation, the Company shall extend to Gessler a demand loan in the capital amount of $50,000 (fifty thousand dollars); interest on such loan, as imputed by the Internal Revenue Service, shall be capitalized on a semi-annual basis. The capital amount and accumulated interest shall be secured by Gessler's stock and stock options in the Company. The Company agrees that the loan balance (the capital amount plus any accumulated interest thereon) will be forgiven on the date (i) upon which a registration statement for the sale of securities of the Company to the public becomes effective, or (ii) upon any merger of the Company or sale of the Company or all or substantially all of its assets, provided that Gessler remains an employee of the Company as of that date. Gessler agrees to execute, as of the same date as this Agreement, such loan indenture and security interest agreements as necessary to give effect to this understanding. 4.4 Medical Benefits, Vacation and Sick Leave. Gessler shall be entitled to participate in such medical, health and life insurance plans as the Company may from time to time implement, and to receive twenty (20) days of paid vacation per year and sick leave on the same basis as the Company's other senior executives. Page 2

4.5 Pension Plan. Gessler shall be entitled to participate as a beneficiary under such pension plan(s) as the Company may from time to time adopt, on the same basis as the Company's other senior executives. 5. Confidentiality and Proprietary Inventions Agreement. Upon the commencement of the term of this Agreement, Gessler shall enter into the Company's standard form of agreement relating to the treatment of the Company's confidential information and ownership of proprietary inventions. 6. Term of Employment. Subject to the provisions of Section 7, the term of the employment engaged by this Agreement shall be a period of four (4) years commencing on June 11, 1996 and ending on June 10, 2000, whereupon the term shall automatically renew for successive one (1) year periods unless one of the parties to the Agreement shall have given notice of its intention to terminate the Agreement not later than ninety (90) days prior to the end of such initial term or any such renewal term. 7. Termination of Employment. 7.1 For Cause. The Company may terminate this Agreement, effective immediately upon written notice to Gessler, if at any time, in the reasonable opinion of the Company's Board of Directors, (a) Gessler commits any material act of dishonesty, fraud or embezzlement with respect to the Company or any subsidiary or affiliate thereof, (b) is convicted of a crime of moral turpitude, or (c) breaches any material obligation under this Agreement. The Company's total liability to Gessler in the event of termination of Gessler's employment under this Subsection 7.1 shall be limited to the payment of Gessler's salary and benefits through the effective date of termination. 7.2 Without Cause. The Company may terminate this Agreement without cause upon thirty (30) days' written notice to Gessler. Upon any termination of this Agreement without cause by the Company, the Company shall pay to Gessler as severance pay an amount equal to one half (1/2) of Gessler's salary for that calendar year during which the termination becomes effective, in addition to such other compensation to which Gessler may be entitled prior to the date of termination. 7.3 By Gessler. Gessler reserves the right to terminate his employment hereunder for any reason upon thirty (30) days' written notice to the Company. The Company's total liability to Gessler in the event of termination of Gessler's employment under this Subsection 7.3 shall be limited to the payment of Gessler's salary and benefits through the effective date of termination and the provisions of Subsection 7.2 shall not apply. 8. Miscellaneous. 8.1 Modification. Any modification of this Agreement shall be effective only if reduced to writing and signed by the parties to be bound thereby. 8.2 Entire Agreement. This Agreement constitutes the entire agreement between the Company and Gessler pertaining to the subject matter hereof and supersedes all prior or contemporaneous written or verbal agreements and understandings between the parties in connection with the subject matter hereof. Page 3

8.3 Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way. 8.4 Waiver. The parties hereto shall not be deemed to have waived any of their respective rights under this Agreement unless the waiver is in writing and signed by the waiving party. No delay in exercising any right shall be a waiver of such right nor shall a waiver of any right on one occasion operate as a waiver of such right on a future occasion. 8.5 Costs of Enforcement. If any action or proceeding shall be commenced to enforce this Agreement or any right arising in connection with this Agreement, each party shall initially bear its own costs and legal fees associated with such action or proceeding. The prevailing party in any such action or proceeding shall be entitled to recover from the other party the reasonable attorneys' fees, costs and expenses incurred by such prevailing party in connection with such action or proceeding. 8.6 Notices. All notices provided for herein shall be in writing and delivered personally or sent by United States mail, registered or certified, postage paid or by Federal Express, addressed as follows:
To the Company: Gene Logic, Inc. 10150 Old Columbia Road Columbia, MD 21046 Mark D. Gessler 111 Speckled Egg Place The Woodlands, TX 77381

To Gessler:

or to such other addresses as either of such parties may from time to time designate in writing. Any notice given under this Agreement shall be deemed to have been given on the date of actual receipt, or, if not received during normal business hours, on the next business day. IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized officers or agents as of the date first written above.
"Company" GENE LOGIC INC. a Delaware corporation By: /s/ Michael J. Brennan ________________________________ Name: Title: Dr. Michael J. Brennan _____________________________ President and Chief Executive Officer ______________________________________ "Employee" /s/ Mark D. Gessler _______________________ Mark D. Gessler

Page 4

Exhibit 10.15 AMENDMENT TO EMPLOYMENT AGREEMENT THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made and entered into as of July 9, 1997, by and between GENE LOGIC INC., a Delaware Corporation (the "Company"), and MARK D. GESSLER ("Executive"). WHEREAS, the Company and Executive previously entered into an Employment Agreement dated May 16, 1996 (the "Employment Agreement") which, among other things, provides for the automatic vesting of all outstanding options to purchase the Company's Common Stock held by the Executive upon a change of control of the Company (the "Vesting Provision"); and WHEREAS, the Company and Executive desire to amend the Employment Agreement to amend and restate the Vesting Provision. NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements set forth below, hereby agree to amend the Employment Agreement as follows: 1. Restatement of Vesting Provision. Section 3.2 of the Employment Agreement shall be amended and restated to read in its entirety as follows: "3.2 Incentive Stock Options. The Company will grant incentive stock options to Gessler in each year during which this Agreement remains in force, in numbers consistent with Gessler's position as Senior Vice President, Corporate Development and Chief Financial Officer of the Company. Such incentive stock options shall become exercisable according to the schedule established by the Board of Directors for the Company's Incentive Stock Option Plan. In the event of: (i) a merger or consolidation of the Company with another corporation, not including any merger or consolidation if immediately thereafter the stockholders of the Company immediately before such transaction own shares representing more than 50% of the outstanding voting securities of the surviving corporation, (ii) a sale of shares by the stockholders of the Company if immediately thereafter the stockholders of the Company immediately before such sale own shares representing less than 50% of the outstanding voting securities of the surviving corporation, or (iii) a sale of all or substantially all of the Company's assets, all options to purchase Common Stock of the Company held by Gessler that have not previously vested under the terms of the applicable Option Agreements shall vest immediately upon the closing of such transaction. In the event of an underwritten initial public offering of the Company's Common Stock, to the extent at least 80% of the aggregate of the shares subject to outstanding options to purchase Common Stock of the Company held by Gessler (other than any such options granted 1.

immediately prior to and in contemplation of such initial public offering) have not previously vested under the terms of the applicable Option Agreements, then the vesting of such options shall be accelerated such that 80% of the shares subject to each such option shall be vested as of the closing of such initial public offering and the remaining 20% of the shares subject to each such option shall vest 180 days from the closing of such initial public offering. If, in the event of an underwritten initial public offering of the Company's Common Stock, 80% or more of the aggregate of the shares subject to outstanding options to purchase Common Stock of the Company held by Gessler (other than any such options granted immediately prior to and in contemplation of such initial public offering) have previously vested, then any remaining unvested shares subject to such options shall vest 180 days from the closing of such initial public offering. 2. Effective Date. This Amendment shall be effective as of the date of the Employment Agreement. Except as amended herein, or as otherwise agreed to in writing by the Company and Executive, all terms of the Employment Agreement shall remain in full force and effect. 2.

IN WITNESS WHEREOF, the parties have executed this Amendment to Employment Agreement as of the date first above written.
THE COMPANY: GENE LOGIC INC. a Delaware Corporation By: /s/ Michael J. Brennan -------------------------Name: Dr. Michael J. Brennan Title: President and Chief Executive Officer ------------------------------------3. /s/ Mark D. Gessler -------------------------Mark D. Gessler EXECUTIVE:

Exhibit 10.16 THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITY UNDER THE SECURITIES ACT OF 1933 UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITY UNDER THE SECURITIES ACT OF 1933
Warrant No. 95-1 Issue Date: August 1, 1995 Void After August 31, 2005 Right to Purchase 39,141 Shares (subject to adjustment) of Series A-1 Convertible Preferred Stock of Senatics Corporation

Senatics Corporation SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT THIS CERTIFIES that, in consideration of value received, Oxford Bioscience Partners L.P. (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Senatics Corporation, a Delaware corporation (the "Company"), Thirty-Nine Thousand One Hundred Forty-One (39,141) fully paid and nonassessable shares of the Company's Series A-1 Convertible Preferred Stock, $0.01 par value (the "Preferred Stock"). The number and exercise price of the securities that may be purchased upon the exercise of this Series A-1 Convertible Preferred Stock Purchase Warrant (the "Warrant") are subject to adjustment as provided herein. 1. Exercise Period and Price - The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time from time to time during the Exercise Period at the Exercise Price. The Exercise Price shall initially be $1.60 per share of Preferred Stock, subject to adjustment as hereinafter provided. The Exercise Period shall commence at 9:00 a.m. Westport, Connecticut time on August 1, 1995 and shall end at 5:00 p.m. Westport, Connecticut time on August 31, 2005. 2. Exercise of Warrant - During the Exercise Period and provided this Warrant has not been terminated, this Warrant shall be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the Notice of Exercise annexed hereto duly executed at the principal office of the Company, in Westport, Connecticut (or 1

such other office or agency of the Company as it may designate) and upon payment of the Exercise Price of the shares thereby purchased (payment to be by check or bank draft payable to the order of the Company). If the amount of the payment received by the Company is less than the Exercise Price, the Holder will be notified of the deficiency and shall make payment in that amount within three days. In the event the payment exceeds the Exercise Price, the Company will refund the excess to the holder within three days of receipt. Upon exercise, the Holder shall be entitled to receive, within a reasonable time after payment in full, one or more certificates, issued in the Holder's name or in such name or names as the Holder may direct, subject to the limitations on transfer contained herein, for the number of shares of Preferred Stock so purchased. The shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. The Company covenants that all shares of Preferred Stock that are issued upon the exercise of rights represented by this Warrant will be fully paid, nonassessable, and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue) and that such number of shares of the Company's Common Stock, par value $0.01, as shall be necessary to permit the conversion of all such shares of Preferred Stock have been, and will remain, reserved and set aside for issuance upon conversion in accordance with the terms of the Preferred Stock. 3. No Fractional Shares or Scrip - No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the Exercise Price per share as then in effect. 4. Charges, Taxes and Expenses - Issuance of certificates for shares of Preferred Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company. 5. No Rights as Shareholder - This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to exercise and payment of the Exercise Price in accordance with Section 2 hereof. 6. Sale or Transfer of the Warrant; Legend - This Warrant shall not be sold or transferred unless either (i) it first shall have registered under the 1933 Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel reasonably satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the 1933 Act and such state laws. Each certificate representing any Warrant that has not been registered and that 2

has not been sold pursuant to an exemption that permits removal of the legend shall bear a legend substantially in the form of the legend affixed to this Warrant. Upon the request of a holder of a certificate representing any Warrant, the Company shall remove the aforementioned legend from the certificate or issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received either (i) an opinion of counsel reasonably satisfactory to the Company to the effect that such legend may be removed from such certificate or (ii) if the present Paragraph (k) of Rule 144 or a substantially similar successor rule remains in force and effect, representations from the holder that such holder is not then, and has not been during the preceding three months, an affiliate of the Company and that such holder has beneficially owned the security (within the meaning of Rule 144) for three years or more. Such Warrant may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 7. Adjustments 7.1 Adjustments for Stock Splits, Reverse Stock Splits and Stock Dividends - In the event that the outstanding shares of Preferred Stock or Preferred Stock shall be subdivided (split), combined (reverse split), by reclassification or otherwise, or in the event of any dividend payable on the Preferred Stock in shares of Preferred Stock, the number of shares of Preferred Stock available for purchase in effect immediately prior to such subdivision, combination, or dividend shall be proportionately adjusted. 7.2 Adjustment for Capital Reorganizations - If at any time there shall be a capital reorganization of the Company or a merger or consolidation of the Company with or into another corporation, or the sale of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as part of such reorganization, merger, consolidation, or sale, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive on exercise of this Warrant during the period specified in this Warrant and on payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation, to which a holder of the Preferred Stock deliverable on exercise of this Warrant would have been entitled on such capital reorganization, merger, consolidation, or sale if this Warrant would have been entitled on such capital reorganization, merger, consolidation, or sale if this Warrant had been exercised immediately before that capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment, as determined in good faith by the Board of Directors of the Company, shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder of this Warrant after the 3

reorganization, merger, consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the number of shares purchasable on exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other securities or property deliverable after that event on exercise of this Warrant. 7.3 Certificate as to Adjustments - Upon the occurrence of each adjustment or readjustment pursuant to this Section 7, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any Holder, furnish or cause to be furnished to such Holder, a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of shares of Preferred Stock and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. 7.4 Notices of Record Date - In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend that is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to each Holder at least ten days prior to the date specified for the taking of a record, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. 8. Reservation of Stock, etc., Issuable on Exercise of Warrant - The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, all shares of Preferred Stock (or other securities) from time to time issuable upon the exercise of this Warrant and all shares of Preferred Stock issuable upon conversion of such shares of Preferred Stock. 9. Loss, Theft, Destruction or Mutilation of Warrant - Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and in case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation in lieu of this Warrant. 10. Remedies - The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not adequate and 4

may be enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 11. Notices, etc. - All notices and other communications from the Company to the holder of this Warrant shall be mailed, by first class mail, to such address as may have been furnished to the Company in writing by such holder, or, until an address is so furnished, to and at the address of the last holder of this Warrant who has so furnished an address to the Company. All communications from the holder of this Warrant to the Company shall be mailed by first class mail to the Company's principal office, or such other address as may have been furnished to the holder in writing by the Company. 12. Miscellaneous - This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of Delaware. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. In Witness Whereof, the Company has caused this Warrant to be executed in its corporate name by its duly authorized President and to be dated as of the issue date set forth on the first page of this Warrant.
In the presence of: Martin A. Vogelbaum -----------------------------Senatics Corporation By: /s/ Alan G. Walton ---------------------------------President

5

NOTICE OF EXERCISE OF STOCK PURCHASE WARRANT TO: Senatics Corporation 1. Pursuant to the terms of the attached Warrant, the undersigned hereby elects to purchase _______ shares of Series A-1 Convertible Preferred Stock of Senatics Corporation, and tenders herewith payment of the Exercise Price of such shares in full. 2. Please issue a certificate or certificates representing said shares of Preferred Stock, in the name of the undersigned or in such other name(s) as is/are specified immediately below or, if necessary, on an attachment hereto: Name Address 3. In the event of partial exercise, please reissue an appropriate Warrant exercisable into the remaining shares. DATE: HOLDER: 6

Exhibit 10.17 THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITY UNDER THE SECURITIES ACT OF 1933 UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITY UNDER THE SECURITIES ACT OF 1933
Warrant No. 95-2 Issue Date: August 1, 1995 Void After August 31, 2005 Right to Purchase 10,859 Shares (subject to adjustment) of Series A-1 Convertible Preferred Stock of Senatics Corporation Senatics Corporation

SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT THIS CERTIFIES that, in consideration of value received, Oxford Bioscience Partners (Bermuda) Limited Partnership (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Senatics Corporation, a Delaware corporation (the "Company"), Ten Thousand Eight Hundred Fifty-Nine (10,859) fully paid and nonassessable shares of the Company's Series A-1 Convertible Preferred Stock, $0.01 par value (the "Preferred Stock"). The number and exercise price of the securities that may be purchased upon the exercise of this Series A-1 Convertible Preferred Stock Purchase Warrant (the "Warrant") are subject to adjustment as provided herein. 1. Exercise Period and Price - The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time from time to time during the Exercise Period at the Exercise Price. The Exercise Price shall initially be $1.60 per share of Preferred Stock, subject to adjustment as hereinafter provided. The Exercise Period shall commence at 9:00 a.m. Westport, Connecticut time on August 1, 1995 and shall end at 5:00 p.m. Westport, Connecticut time on August 31, 2005. 2. Exercise of Warrant - During the Exercise Period and provided this Warrant has not been terminated, this Warrant shall be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the Notice of Exercise annexed hereto duly executed at the principal office of the Company, in Westport, Connecticut (or 1

such other office or agency of the Company as it may designate) and upon payment of the Exercise Price of the shares thereby purchased (payment to be by check or bank draft payable to the order of the Company). If the amount of the payment received by the Company is less than the Exercise Price, the Holder will be notified of the deficiency and shall make payment in that amount within three days. In the event the payment exceeds the Exercise Price, the Company will refund the excess to the holder within three days of receipt. Upon exercise, the Holder shall be entitled to receive, within a reasonable time after payment in full, one or more certificates, issued in the Holder's name or in such name or names as the Holder may direct, subject to the limitations on transfer contained herein, for the number of shares of Preferred Stock so purchased. The shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. The Company covenants that all shares of Preferred Stock that are issued upon the exercise of rights represented by this Warrant will be fully paid, nonassessable, and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue) and that such number of shares of the Company's Common Stock, par value $0.01, as shall be necessary to permit the conversion of all such shares of Preferred Stock have been, and will remain, reserved and set aside for issuance upon conversion in accordance with the terms of the Preferred Stock. 3. No Fractional Shares or Scrip - No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the Exercise Price per share as then in effect. 4. Charges, Taxes and Expenses - Issuance of certificates for shares of Preferred Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company. 5. No Rights as Shareholder - This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to exercise and payment of the Exercise Price in accordance with Section 2 hereof. 6. Sale or Transfer of the Warrant; Legend - This Warrant shall not be sold or transferred unless either (i) it first shall have registered under the 1933 Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel reasonably satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the 1933 Act and such state laws. Each certificate representing any Warrant that 2

has not been registered and that has not been sold pursuant to an exemption that permits removal of the legend shall bear a legend substantially in the form of the legend affixed to this Warrant. Upon the request of a holder of a certificate representing any Warrant, the Company shall remove the aforementioned legend from the certificate or issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received either (i) an opinion of counsel reasonably satisfactory to the Company to the effect that such legend may be removed from such certificate or (ii) if the present Paragraph (k) of Rule 144 or a substantially similar successor rule remains in force and effect, representations from the holder that such holder is not then, and has not been during the preceding three months, an affiliate of the Company and that such holder has beneficially owned the security (within the meaning of Rule 144) for three years or more. Such Warrant may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 7. Adjustments 7.1 Adjustments for Stock Splits, Reverse Stock Splits and Stock Dividends - In the event that the outstanding shares of Preferred Stock or Preferred Stock shall be subdivided (split), combined (reverse split), by reclassification or otherwise, or in the event of any dividend payable on the Preferred Stock in shares of Preferred Stock, the number of shares of Preferred Stock available for purchase in effect immediately prior to such subdivision, combination, or dividend shall be proportionately adjusted. 7.2 Adjustment for Capital Reorganizations - If at any time there shall be a capital reorganization of the Company or a merger or consolidation of the Company with or into another corporation, or the sale of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as part of such reorganization, merger, consolidation, or sale, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive on exercise of this Warrant during the period specified in this Warrant and on payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation, to which a holder of the Preferred Stock deliverable on exercise of this Warrant would have been entitled on such capital reorganization, merger, consolidation, or sale if this Warrant would have been entitled on such capital reorganization, merger, consolidation, or sale if this Warrant had been exercised immediately before that capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment, as determined in good faith by the Board of Directors of the Company, shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder of this Warrant after the 3

reorganization, merger, consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the number of shares purchasable on exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other securities or property deliverable after that event on exercise of this Warrant. 7.3 Certificate as to Adjustments - Upon the occurrence of each adjustment or readjustment pursuant to this Section 7, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any Holder, furnish or cause to be furnished to such Holder, a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of shares of Preferred Stock and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. 7.4 Notices of Record Date - In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend that is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to each Holder at least ten days prior to the date specified for the taking of a record, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. 8. Reservation of Stock, etc., Issuable on Exercise of Warrant - The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, all shares of Preferred Stock (or other securities) from time to time issuable upon the exercise of this Warrant and all shares of Preferred Stock issuable upon conversion of such shares of Preferred Stock. 9. Loss, Theft, Destruction or Mutilation of Warrant - Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and in case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation in lieu of this Warrant. 10. Remedies - The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not adequate and 4

may be enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 11. Notices, etc. - All notices and other communications from the Company to the holder of this Warrant shall be mailed, by first class mail, to such address as may have been furnished to the Company in writing by such holder, or, until an address is so furnished, to and at the address of the last holder of this Warrant who has so furnished an address to the Company. All communications from the holder of this Warrant to the Company shall be mailed by first class mail to the Company's principal office, or such other address as may have been furnished to the holder in writing by the Company. 12. Miscellaneous - This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of Delaware. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. In Witness Whereof, the Company has caused this Warrant to be executed in its corporate name by its duly authorized President and to be dated as of the issue date set forth on the first page of this Warrant.
In the presence of: Martin A. Vogelbaum ----------------------------Senatics Corporation By: /s/ Alan G. Walton --------------------------President

5

NOTICE OF EXERCISE OF STOCK PURCHASE WARRANT TO: Senatics Corporation 1. Pursuant to the terms of the attached Warrant, the undersigned hereby elects to purchase _______ shares of Series A-1 Convertible Preferred Stock of Senatics Corporation, and tenders herewith payment of the Exercise Price of such shares in full. 2. Please issue a certificate or certificates representing said shares of Preferred Stock, in the name of the undersigned or in such other name(s) as is/are specified immediately below or, if necessary, on an attachment hereto: Name Address 3. In the event of partial exercise, please reissue an appropriate Warrant exercisable into the remaining shares. DATE: HOLDER: 6

Exhibit 10.18 THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION TO SUCH ACT. Void after the Fifth Anniversary of the Date Hereof WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK of GENE LOGIC INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFIES THAT, for value received, ARE-708 QUINCE ORCHARD, LLC, a Delaware limited liability company, having its principal offices at 251 South Lake Avenue, Suite 700, Pasadena, California 91101, together with its successors and assigns (the "Investor") is entitled to purchase, up to Twenty Thousand (20,000) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock (the "Common Stock") of Gene Logic Inc., a Delaware corporation having its principal offices at 10150 Old Columbia Road, Columbia, Maryland 21046 (the "Company"), at the per share purchase price described in Section 1.3 below, subject to the provisions and upon the terms and conditions hereinafter set forth. 1. Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby (the "Warrant Stock") may be purchased, are as follows: 1.1 Term. Subject to the terms hereof, the purchase right represented by this Warrant may be exercised in whole or in part at any time and from time to time from and after the date hereof and on or before the date which is the earlier of (i) the fifth anniversary of the date of this Warrant; (ii) the closing of the initial underwritten public offering by the Company of its Common Stock effected pursuant to a Registration Statement filed under the Securities Act of 1933, as amended (the "Act"); (iii) the effective time of a merger or reorganization following which the stockholders of the Company immediately prior to such transaction own after such transaction less

than fifty percent (50%) of the equity securities of the surviving corporation (or its parent, if any), or (iv) the closing of a sale of all or substantially all of the Company's assets; provided that, if the last day on which this Warrant may be exercised is a Sunday or a legal holiday or a day on which banking institutions doing business in the City of Baltimore are authorized by law to close, this Warrant may be exercised prior to 5:00 p.m. (Baltimore time) on the next succeeding full business day with the same force and effect as if exercised on such last day specified herein. 1.2 Number of Shares. The number of shares of Common Stock for which this Warrant is initially exercisable is Twenty Thousand (20,000) shares, which number is subject to adjustment pursuant to Section 2 of this Warrant. 1.3 Purchase Price. The initial per share purchase price for the shares of Common Stock to be issued upon exercise of this Warrant shall be $5.40, subject to adjustment as provided herein (the "Warrant Price"). 1.4 Method of Exercise. The exercise of the purchase rights evidenced by this Warrant shall be effected by (a) the surrender of the Warrant, together with a duly executed copy of the form of a subscription attached hereto, to the Company at its principal offices and (b) the delivery of the purchase price (i) by check or bank draft payable to the Company's order or by wire transfer to the Company's account for the number of shares for which the purchase rights hereunder are being exercised or any other form of consideration approved by the Company's Board of Directors or (ii) pursuant to the procedure set forth in Section 1.5. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided herein or at such latter date as may be specified in the executed form of subscription, and at such time the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such exercise as provided herein shall be deemed to have become the holder or holders of record thereof. 1.5 Cashless Exercise. In addition to and without limiting the rights of the holder hereof under the terms hereof, at the holder's option this Warrant may be exercised in whole or in part at any time or from time to time prior to its expiration for a number of shares of Common Stock having an aggregate fair market value on the date of such exercise equal to the difference between (a) the fair market value of the number of shares of Common Stock subject to this Warrant designated for exercise by the holder hereof on the date of the exercise and (b) the aggregate Warrant Price for such shares in effect at such time. For the purposes of this Warrant, the "fair market value" of shares of Common Stock shall be calculated on the basis of (a) if the Common Stock is then traded on a securities exchange, the average of the closing prices of the Common Stock on such exchange over the 20 trading day period ending three (3) 2

trading days prior to the date of exercise, (b) if the Common Stock is then regularly traded over-the-counter, the average of the sale prices or secondarily the closing bid of the Common Stock over the 20 trading day period ending three (3) trading days prior to the date of exercise, or (c) if there is no active public market for the Common Stock, the fair market value thereof shall be determined in good faith by the Company's Board of Directors. In the event the holder of this Warrant exercises this Warrant contingent upon the closing of a public offering, the "fair market value" of a share of Common Stock on the date of exercise shall be equal to the initial price to the public specified in the final prospectus with respect to such public offering. The following diagram illustrates how many shares would then be issued upon exercise pursuant to this Section 1.5:
Let FMV PSP N X X = = = = = Fair market value per share of Common Stock at date of exercise. Per share Warrant Price at date of exercise. Number of shares of Common Stock desired to be exercised. Number of shares of Common Stock issued upon exercise. (FMV)(N)-(PSP)(N) ----------------FMV

No payment of any cash or other consideration to the Company shall be required from the holder of this Warrant in connection with any exercise of this Warrant pursuant to this Section 1.5. Such exercise shall be effective upon the date of receipt by the Company of the original Warrant surrendered for cancellation and a written request from the holder hereof that the exercise pursuant to this section be made, or at such later date as may be specified in such request. 1.6 Issuance of Shares. As soon as reasonably practicable after each exercise of this Warrant, in whole or in part, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, (a) a certificate or certificates for the number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock to which such holder shall be entitled upon such exercise, and (b) in case such exercise is in part only, a new Warrant or Warrants of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment thereof) to the number of such shares called for on the face of this Warrant minus the number of such shares designated by the holder upon such exercise as provided herein. 2. Certain Adjustments. 2.1 Mergers Consolidations or Sale of Assets. If at any time after the date hereof there shall be a capital reorganization (other than a combination or subdivision of Common Stock otherwise provided for herein), or spin-off, or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, then, as a part of such reorganization, spin-off, merger, consolidation or sale, lawful provision shall be made so that the Investor shall thereafter be entitled to receive upon 3

exercise of this Warrant, during the period specified in this Warrant and upon payment of the purchase price, the number of shares of stock or other securities, cash or property of the Company or the successor corporation resulting from such reorganization, spin-off, merger, consolidation or sale, to which a holder of the Common Stock deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such reorganization, spin-off, merger, consolidation or sale if this Warrant had been exercised immediately before such reorganization, spin-off, merger, consolidation or sale. In any such case, appropriate adjustment (as determined reasonably and in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Investor after the reorganization, spin-off, merger, consolidation or sale to the end that the provisions of this Warrant (including adjustment of the purchase price then in effect and the number of shares of Common Stock issuable upon exercise hereof) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. 2.2 Splits and Subdivisions Dividends. In the event the Company should at any time or from time to time effect or fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or warrants, options or other rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share purchase price shall be appropriately decreased and the number of shares of Common Stock issuable upon exercise hereof shall be appropriately increased in proportion to such increase of outstanding shares. 2.3 Combination of Shares. If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share purchase price shall be appropriately increased and the number of shares of Common Stock issuable upon exercise hereof shall be appropriately decreased in proportion to such decrease in outstanding shares. 2.4 Notice of Other Distributions. In the event the Company intends to declare a distribution payable in securities of the Company (other than Common Stock Equivalents) or other persons, evidences of indebtedness issued by the Company or other persons, assets (including cash dividends) or options or rights not referred to in subsection 2.2, then, in each such case for purposes of this subsection 2.4, the Company shall deliver to the Investor at least twenty (20) days prior to the date of any such distribution written notice of the Company's intention to make such distribution and 4

shall provide the Investor with any information related thereto as the Investor shall reasonably request. 2.5 Issuance of Additional Common Stock (a) If, after the date hereof, the Company shall issue or sell (i) Additional Shares of Common Stock without consideration or for a consideration per share less than the fair market value of a share of Common Stock in effect immediately prior to such issue or sale, or (ii) options or convertible securities with a minimum exercise or exchange price less than the fair market value of a share of Common Stock then, and in each such case, the Warrant Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the nearest .001 of a cent) determined by multiplying such Warrant Price by a fraction (i) the numerator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue or sale plus (B) the number of shares of Common Stock that the aggregate consideration received by the Company upon such issuance or sale (or, in the case of options or convertible securities, receivable by the Company upon exercise or exchange) would purchase at such fair market value, and (ii) the denominator of which shall be the number of shares of Common Stock outstanding immediately after such issue or sale (in the case of options or convertible securities assuming exercise or exchange thereof). (b) For purposes of this Section 2.5 only, "Common Stock" shall mean the Common Stock of the Company and all Common Stock Equivalents. For the purposes of this Section 2.5, the consideration for the issue or sale of Additional Shares of Common Stock shall, irrespective of the accounting treatment of such consideration, (i) insofar as it consists of cash, be computed at the net amount of cash received by the Company, and (ii) insofar as it consists of property (including securities) other than cash, be computed at the fair value thereof at the time of such issue or sale, as determined in good faith by the Board of Directors of the Company. In the event of a dispute in good faith by the Investor as to the fair market value of the consideration consisting of property, at the option of the Investor, the Company shall engage a consulting firm or investment banking firm mutually agreed to by the Investor and the Company to prepare an independent appraisal of the fair market value of such property to be distributed. The expenses of such appraisal shall be borne by the Company. Insofar as the consideration for the issue or sale of Additional Shares of Common Stock consists of both cash and property, it shall be computed as provided in clauses (i) and (ii) of this Section 2.5(b). (c) (i) Notwithstanding anything contained herein to the contrary, the consideration for any Common Stock Equivalents shall be the total amount of consideration received by the Company for the issuance of such Common Stock Equivalents plus the minimum amount of consideration payable to the Company upon exercise, conversion or exchange of Common Stock Equivalents (the "Net Consideration") determined as of the date of issuance of such Common 5

Stock Equivalents. Any obligation, agreement or understanding to issue Common Stock Equivalents at any time in the future shall be deemed to be an issuance at the time such obligation or agreement is made or arises. No adjustment of the Warrant Price shall be made under this Section 2.5 upon the issuance of any shares of Common Stock which are issued pursuant to the exercise, conversion or exchange of any Common Stock Equivalents if any adjustment shall previously have been made upon the issuance of any such Common Stock Equivalents. (ii) Should the Net Consideration for any such Common Stock Equivalents be increased or decreased from time to time, then, upon the effectiveness of such change, the Warrant Price will be that which would have been obtained (A) had the adjustments made upon the issuance of such Common Stock Equivalents been made upon the basis of the actual Net Consideration (as so increased or decreased) of such Common Stock Equivalents, and (B) had adjustments to such Warrant Price since the date of issuance of such Common Stock Equivalents been made to such Warrant Price as adjusted pursuant to (A) above. Any adjustment of the Warrant Price with respect to this paragraph which relates to Common Stock Equivalents shall be disregarded if, as, and when all of such Common Stock Equivalents expire or are canceled without being exercised, so that the Warrant Price effective immediately upon cancellation or expiration shall be equal to the Warrant Price in effect at the time of the issuance of the expired or canceled Common Stock Equivalents, with such additional adjustments as would have been made to such Warrant Price had the expired or canceled Common Stock Equivalents not been issued. (d) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Company, whether or not subsequently reacquired or retired by the Company other than: (i) the issuance or sale of 2,000,000 shares of Common Stock or such additional number of shares of Common Stock as authorized by the Board of Directors, or the grant of options exercisable therefor, to directors, officers, employees and consultants of the Company or any subsidiary pursuant to any qualified or non-qualified stock option plan or agreement, stock purchase plan or agreement, stock restriction agreement, employee stock ownership plan (ESOP), consulting agreement, or such other options, issuances, arrangements, agreements or plans approved by a majority of the members of the Board of Directors. (ii) shares of Common Stock issued or issuable upon the exercise of outstanding warrants for an aggregate of 50,000 shares of Series A-1 Preferred Stock of the Company issued to the holders of such Series A-1 Preferred Stock in connection with the acquisition of such shares; (iii) shares of Common Stock issued or issuable upon the exercise of warrants issued in connection with the establishment or maintenance by the Company of 6

credit facilities or equipment financing transactions, approved in each case by the Board of Directors; (iv) shares of Common Stock issued or deemed issued in connection with that certain Equity Adjustment Agreement dated March 29, 1996, by and between the Company and Michael J. Brennan, M.D., Ph.D.; (v) shares of Common Stock issued or issuable in connection with the acquisition of operating assets (including patents, licenses and other intellectual property rights) or other businesses or the establishment of joint ventures or strategic business relationships approved in each case by the Board of Directors; and (vi) 66,666 shares of Common Stock issued or issuable to BIOS Laboratories, Inc., provided, that, if less than 66,666 shares are issued to BIOS Laboratories, Inc., the remaining shares may be issued under (i) above. All such numbers shall be subject to equitable adjustment in the event of any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Company. (e) The number of shares of Common Stock that the holder of this Warrant shall be entitled to receive upon each exercise hereof after any adjustment pursuant to this Section 2.5 shall be determined by multiplying (i) the number of shares of Common Stock that were issuable immediately prior to such adjustment, by (ii) the fraction of which (A) the numerator is the Warrant Price immediately prior to such adjustment and (B) the denominator is the Warrant Price immediately following such adjustment. 2.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 2, the Company at its expense will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate, signed by the Company's Chief Financial Officer, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the holder of this Warrant. The Company will furnish or cause to be furnished to such holder a certificate setting forth (a) such adjustments and readjustments, (b) the Warrant Price at the time in effect and how it was calculated and (c) the number of shares of Common Stock issuable upon exercise hereof and the amount, if any, of other property at the time receivable upon the exercise of the Warrant. 2.7 Other Dilutive Events. If any event shall occur as to which the provisions of Section 2 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles 7

of such sections, then, in each such case, the Board of Directors of the Company shall make such adjustment, if any, on a basis consistent with the essential intent and principles established in Section 2, necessary to preserve, without dilution, the purchase rights represented by this Warrant. The Company will promptly notify the Investor of any such adjustments and shall make the suggested adjustments. 2.8 No Dilution or Impairment. The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not permit the par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount payable therefor upon such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock on the exercise of the Warrants from time to time outstanding; and (c) will not take any action which results in any adjustments of the Warrant Price if the total number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purpose of issue upon such exercise. 2.9 Notices of Record Date etc. In the event of: (a) any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend payable out of earned surplus at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to any other person or any consolidation or merger involving the Company; or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the holder of this Warrant at least twenty (20) days prior to the earliest date specified below, a notice specifying: (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and (ii) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining stockholders entitled to vote thereon and the time, if any such time is to be fixed, as of which the holders of record of Common Stock shall be 8

entitled to exchange their shares of Common Stock for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up. 3. Fractional Shares. No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional share, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined in accordance with Section 1.5 hereof. 4. Representations and Warranties of the Company. 4.1 Authorization. The Company has full power and authority to enter into this Warrant. This Warrant has been duly authorized, executed and delivered by the Company and constitutes its valid and legally binding obligation, enforceable in accordance with its terms. 4.2 Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of its shares of Common Stock, free from preemptive rights, as shall from time to time be sufficient to effect the exercise of this Warrant, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of the entire Warrant, in addition to such other remedies as shall be available to the holder of this Warrant, the Company will take such action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. If any shares of its Common Stock to be reserved for the purpose of issuance upon exercise of the Warrants require registration with or approval of any governmental authority under any applicable law before such shares of Common Stock may be validly issued or delivered, then it shall secure such registration or approval, as the case may be, and maintain such registration or approval in effect so long as so required. Nothing herein shall be deemed to require the Company to register the sale of the Common Stock issued in connection with any exercise of this Warrant. 4.3 Adjustment in Number of Shares Issuable and Purchase Price. There has not been nor will there be any adjustment to the number of shares issuable or the purchase price payable upon the exercise of any securities of the Company convertible into or exchangeable for shares of Common Stock resulting from the issuance or exercise of this Warrant. 4.4 Valid Issuance. This Warrant, when issued and delivered in accordance with the terms hereof will be duly authorized and validly issued, and the Common Stock issuable upon the exercise hereof, when issued pursuant to the terms hereof and upon payment of the exercise price, shall, upon such issuance, be duly authorized, validly issued, fully paid and nonassessable. 9

4.5 Series C Convertible Preferred Stock. The per share purchase price for the shares of Common Stock to be issued upon conversion of the Company's outstanding Series C Convertible Preferred Stock is $4.50 as of the date hereof. 5. Privilege of Stock Ownership. Prior to the exercise of this Warrant, the Investor shall not be entitled, by virtue of holding this Warrant, to any rights of a stockholder of the Company, including (without limitation) the right to vote, receive dividends or other distributions, exercise preemptive rights or be notified of stockholder meetings, and such holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. Nothing in this Section 5, however, shall limit the right of the Investor to be provided the notices described in Section 2 hereof or to participate in distributions described in Section 2 hereof if the Investor ultimately exercises this Warrant. 6. Limitation of Liability. Except as otherwise provided herein, in the absence of affirmative action by the holder hereof to purchase the Common Stock in accordance herewith, no mere enumeration herein of the rights or privileges of the holder hereof shall give rise to an obligation on such holder to purchase any securities or any liability of such holder for the purchase price or as a stockholder of the Company, whether such obligation or liability is asserted by the Company or by creditors of the Company. 7. Representations and Warranties of the Investor. The Investor represents and warrants to the Company as follows: 7.1 Purchase Entirely for Own Account. This Warrant is being acquired and, if this Warrant is exercised, the Common Stock issuable upon exercise hereof will be acquired, for investment for such Investor's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the federal or state securities laws. 7.2 Investment Experience. The Investor represents that it can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Common Stock issuable upon exercise hereof. The Investor also represents it has not been organized solely for the purpose of acquiring the Warrant or the Common Stock issuable upon exercise hereof. 7.3 Restricted Securities. The Investor understands that the Warrant being issued hereunder and the Common Stock issuable upon exercise hereof are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and have not been registered under the Act nor qualified under applicable state securities laws and that under such laws and applicable regulations such securities may not be resold without registration under the Act, except in certain limited 10

circumstances. In this connection, the Investor represents that it is familiar with Rule 144 promulgated under the Act ("Rule 144"), as presently in effect, and understands the resale limitations imposed thereby and by the Act. 7.4 Accredited Investor. The Investor is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Act. 7.5 Legends. It is understood that the certificates evidencing the Common Stock issuable upon exercise hereof may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION TO SUCH ACT" (b) Any legend required by the laws of the States of Delaware or Maryland and any other state in which the securities will be issued. 8. Additional Agreements 8.1 Market Stand-Off Agreement Except to the extent necessary to maintain Alexandria Real Estate Equities Inc.'s, the non-managing member of the Investor ("ARE"), status as a Real Estate Investment Trust ("REIT") under the Internal Revenue Code of 1986, as amended, the Investor hereby agrees that, during the period of duration specified by the Company or an underwriter of Common Stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to a donee who agree to be similarly bound) any portion of this Warrant or any Common Stock issuable upon exercise hereof held by it at any time during such period except Common Stock included in such registration; provided, however, that: (a) all executive officers and directors of the Company and all other persons with registration rights enter into similar agreements; and (b) such period shall not exceed three hundred sixty five (365) days beginning the day after the effective date of such registration statement. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Common Stock issuable upon exercise hereof until the end of such period. 11

8.2 Confidentiality. In handling any confidential information Investor shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same type to maintain the confidentiality of any nonpublic information thereby received or received pursuant to the Warrant except that disclosure of such information may be made (i) to the subsidiaries or affiliates of Investor in connection with their present or prospective business relations with the Company, (ii) to prospective transferees or purchasers of any interest in this Warrant, provided that they have entered into a comparable confidentiality agreement in favor of the Company, (iii) as may be required in connection with the examination, audit or similar investigation of Investor. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Investor when disclosed to Investor, or (b) is disclosed to Investor by a third party, provided, that Investor does not have actual knowledge that such third party is prohibited from disclosing such information. 8.3 Refusal Rights. On or before the date on which the Company becomes subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if the Investor desires to sell all or any part of the Common Stock acquired under this Warrant (including any securities received in respect thereof pursuant to recapitalization and the like), and an offeror (the "Offeror") has made an offer therefore, which offer the Investor desires to accept, the Investor shall: (i) obtain in writing a bona fide offer (the "Bona Fide Offer") for the purchase thereof from the Offeror; and (ii) give written notice (the "Warrant Notice") to the Company setting forth the Investor's desire to sell such shares, which Warrant Notice shall be accompanied by a photocopy of the original executed Bona Fide Offer and shall set forth at least the name and address of the Offeror and the price and terms of the Bona Fide Offer. Upon receipt of the Warrant Notice, the Company shall have an option to purchase any or all of such shares of Common Stock specified in the Warrant Notice, such option to be exercisable by giving, within fifteen (15) days after the receipt of the Warrant Notice, a written counter-notice to the Investor. If the Company elects to purchase any or all such shares of Common Stock, it shall be obligated to purchase, and the Investor shall be obligated to sell to the Company, such shares at the price and terms indicated in the Bona Fide Offer within forty-five (45) days from the date of receipt by the Company of the Warrant Notice. The Investor may sell, pursuant to the terms of the Bona Fide Offer, any or all of such shares not purchased or agreed to be purchased by the Company at any time during the sixty (60) days immediately following the expiration of the fifteen (15)-day period during which the Company may give the aforesaid counter-notice. If any or all such shares of Common Stock are not sold pursuant to a Bona Fide Offer within the time period permitted above, the unsold shares of Common Stock shall remain subject to the terms of this subsection 8.3. 9. Transfers and Exchanges. 12

9.1 The Investor agrees not to sell, hypothecate, pledge or otherwise dispose of any interest in the Warrant or the Common Stock issuable upon exercise hereof in the United States, its territories, possessions or any area subject to its jurisdiction, or to any person who is a national thereof or resident therein (including any estate of such person), or any corporation, partnership or other entity created or organized therein, other than in accordance with the Act. 9.2 Upon presentation to the Company's transfer agent of the form of Assignment attached hereto, a new Warrant shall be issued to the new holder hereof. New warrants issued in connection with transfers or exchanges shall not require the signature of the new holder hereof and shall be identical in form and provision to this Warrant except as to the number of shares. 9.3 Each certificate evidencing the shares of Common Stock issued upon exercise of this Warrant, or upon any transfer of such shares (other than a transfer registered under the Act or any subsequent transfer of shares so registered) shall, at the option of the Company, contain a legend, in form and substance reasonably satisfactory to the Company and its counsel, restricting the transfer of such shares to sales or other dispositions exempt from the requirements of the Act. 9.4 Ownership of Warrants. The Company may treat the person in whose name any Warrant is registered on the register kept at the office of the Company maintained pursuant to Section 9.5(a) as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes, notwithstanding any notice to the contrary. A Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued. 9.5 Transfer and Exchange of Warrants. (a) The Company's counsel, Cooley Godward LLP, will serve as transfer agent for the Company for purposes of this Warrant, where notices, presentations and demands in respect of this Warrant may be made upon it, until such time as the Company shall notify the holders of the Warrants of any change in such transfer agent; and (b) Upon the surrender of any Warrant, properly endorsed, for registration of transfer or for exchange, the Company at its expense will execute and deliver to or upon the order of the holder thereof a new Warrant or Warrants of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 13

10. Successors and Assigns. The terms and provisions of this Warrant shall be binding upon the Company and the Investor and their respective successors and assigns, subject at all times to the restrictions set forth herein. 11. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor and dated as of such cancellation, in lieu of this Warrant. 12. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday. 13. Amendments and Waivers. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor. Any such amendment or waiver shall be binding on the parties. 14. Governing Law. The terms and conditions of this Warrant shall be governed by and construed in accordance with Delaware law, without regard to conflict of law provisions. 15. Notices. Except as otherwise provided in this Warrant, any requirement for a notice, demand or request under this Warrant will be satisfied by a writing (a) hand delivered with receipt; (b) mailed by United States registered or certified mail or Express Mail, return receipt requested, postage prepaid; or (c) sent by Federal Express or any other nationally recognized overnight courier service, and addressed as follows: if to the Holder, at its address as shown on the books of the Company; and if to the Company, at the address indicated therefor in the first paragraph of this Warrant, Attn: Chief Financial Officer, with a copy to L. Kay Chandler, Esq., Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San Diego, California 92121. All notices that are sent in accordance with this Section 15 will be deemed received by the Holder or the Company on the earliest of the following applicable time periods: (i) the date the return receipt is executed; or (ii) the date delivered as documented by the overnight courier service or the hand delivery receipt. Either the Holder or the Company may designate a change of address by written notice to the other party. 16. Securities Matters 14

From and after the date on which the Company becomes subject to the reporting requirements of the Exchange Act and in order to make available the benefits of certain rules and regulations of the Securities and Exchange Commission (the "SEC") which may at any time permit the sale of the shares of Common Stock issuable upon exercise of the Warrant to the public without registration, the Company agrees to use its reasonable best efforts to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (c) furnish to the Investor, within a reasonable amount of time upon written request, a written statement by the Company as to its compliance with the public information requirements of Rule 144 of the Act and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Investor may reasonably require to allow the Investor to sell any such securities without registration. 15

[Warrant for the Purchase of Shares of Common Stock of Gene Logic Inc.] GENE LOGIC INC.
By: /s/ Mark D. Gessler ------------------------------Name: Mark D. Gessler Title: Senior Vice President and CFO Dated: August 29, 1997

ACCEPTED AND AGREED: ARE-708 QUINCE ORCHARD, LLC By: ARE-QRS Corp. Its Sole Managing Member
By: /s/ Joel S. Marcus -----------------------------------Name: Joel S. Marcus Title: Chief Executive Officer Dated: August 29, 1997

16

SUBSCRIPTION GENE LOGIC INC. 708 Quince Orchard Road, Gaithersburg, Maryland Ladies and Gentlemen: The undersigned, _____________________, hereby elects to purchase, pursuant to the provisions of the Warrant dated, _________ __, 1997 held by the undersigned, ________ shares of the Common Stock of Gene Logic Inc., a Delaware corporation, and tenders herewith payment of the purchase price of such shares in full. In exercising its rights to purchase such Common Stock, the undersigned hereby confirms the investment representations made in Section 7 and the agreements made in Section 8 of such Warrant. Dated: ___________ 19__ .

By Address: 17

[FORM OF ASSIGNMENT] The undersigned hereby assigns this Warrant to

(Print or type name, address and zip code of assignee) Please insert Social Security or other identifying number of assignee

and irrevocably appoints ___________________ as agent to transfer this Warrant on the books of the Company. The agent may substitute another to act for him or it.
Dated: --------------------------Signed: ---------------------------

-----------------------------------------------------------------------------(Sign exactly as name appears on the front of this Warrant)

Dated:

---------------------------

Signed: Name: Title:

---------------------------

-------------------------------------------------------

18

EXHIBIT 10.19 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS. WARRANT TO PURCHASE A MAXIMUM OF 25,758 SHARES OF PREFERRED STOCK OF GENE LOGIC INC. This certifies that VENTURE LENDING & LEASING, INC., a Maryland corporation, or assigns (the "Holder"), for value received, is entitled to purchase from GENE LOGIC INC., a Delaware corporation (the "Company"), 25,758 fully paid and nonassessable shares of the Company's Preferred Stock ("Preferred Stock") for cash at a price of $2.20 per share (the "Stock Purchase Price") at any time or from time to time up to and including 5:00 p.m. (Eastern Time) on December 31, 2002 (the "Expiration Date"), upon surrender to the Company at its principal office at 10150 Old Columbia Road, Columbia, Maryland 21046 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 4 of this Warrant. This Warrant is subject to the following terms and conditions: 1. Exercise; Issuance of Certificates; Payment for Shares. (a) Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of the Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the shares of Preferred Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased. In the event, however, that pursuant to the Company's Certificate of Incorporation, as amended, an event causing automatic conversion of the Company's Preferred Stock shall

have occurred prior to the exercise of this Warrant, in whole or in part, then this Warrant shall be exercisable for the number of shares of Common Stock of the Company into which the Preferred Stock not purchased upon any prior exercise of the Warrant would have been so converted (and, where the context requires, reference to "Preferred Stock" shall be deemed to include such Common Stock). The Company agrees that the shares of Preferred Stock purchased under this Warrant shall be and are deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of Preferred Stock so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company's expense within a reasonable time after the rights represented by this Warrant have been so exercised. Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Preferred Stock as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2. (b) The Holder, in lieu of exercising this Warrant by the payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to receive that number of shares of Preferred Stock equal to the quotient of: (i) the difference between (A) the Per Share Price (as hereinafter defined) of the Preferred Stock, less (B) the Stock Purchase Price then in effect, multiplied by the number of shares of Preferred Stock the Holder would otherwise have been entitled to purchase hereunder pursuant to clause (a) of this Section 1 (or such lesser number of shares as the Holder may designate in the case of a partial exercise of this Warrant); over (ii) the Per Share Price. (c) For purposes of clause (b) of this Section 1, "Per Share Price" means the price per share which the Company would obtain from a willing buyer for shares sold by the Company from authorized but unissued shares as such price shall be agreed upon by the Holder and the Company or, if agreement cannot be reached within ten (10) business days of the Holder's election hereunder, as such price shall be determined in good faith by the Board of Directors of the Company. (d) This Warrant will be wholly void and of no effect after the date (the "Expiration Date") which is the earlier of (i) 5:00 p.m. (Eastern time) December 31, 2002, (ii) the effective time of a merger or reorganization following which stockholders of the Company immediately prior to such transaction own less than fifty percent (50%) of the equity

securities of the surviving corporation (or its parent, if any), so long as the surviving entity is publicly traded and all securities in the surviving entity held by the Company's shareholders are free of trading restrictions within 90 days of the effective time of such transaction, or (iii) the closing of a sale of all or substantially all of the Company's assets, and if the last day on which this Warrant may be exercised is a Sunday or a legal holiday or a day on which banking institutions doing business in the City of Baltimore are authorized by law to close, this Warrant may be exercised prior to 5:00 p.m. (Eastern time) on the next succeeding full business day with the same force and effect as if exercised on such last day specified herein. 2. Limitation on Transfer. (a) The Warrant and the Preferred Stock shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to insure compliance with the provisions of the Securities Act. Each holder of this Warrant or the Preferred Stock issuable hereunder will cause any proposed transferee of the Warrant or Preferred Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2. (b) Each certificate representing (i) this Warrant, (ii) the Preferred Stock, (iii) shares of the Company's Common Stock issued upon conversion of the Preferred Stock and (iv) any other securities issued in respect of the Preferred Stock or Common Stock issued upon conversion of the Preferred Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS. (c) The Holder of this Warrant and each person to whom this Warrant is subsequently transferred represents and warrants to the Company (by acceptance of such transfer) that it will not transfer the Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the

time of issuance thereof) except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel for the Company, that an exemption from such registration is available. 3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Preferred Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Preferred Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Preferred Stock may be listed. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i) if the total number of shares of Preferred Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Preferred Stock then outstanding and all shares of Preferred Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Preferred Stock then authorized by the Company's Certificate of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action upon the conversion of all such shares of Preferred Stock together with all shares of Common Stock then outstanding and then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding would exceed the total number of shares of Common Stock then authorized by the Company's Certificate of Incorporation. 4. Adjustment of Stock Purchase Price Number of Shares. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. For purposes of this Section 4, the term "Preferred Stock" shall not be deemed to include the Common Stock issuable upon conversion of the Preferred Stock. Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable

pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment. 4.1 Subdivision or Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Preferred Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Preferred Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 4.2 Dividends in Preferred Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Preferred Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, (a) Preferred Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Preferred Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or (b) Preferred Stock or other or additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement (other than shares of Preferred Stock issued as a stock split or combination, adjustments in respect of which shall be covered by the terms of Section 4.1 above, or a stock dividend, adjustments in respect of which shall be covered by the terms of Section 4.2(a) above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Preferred Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to in clause (b)) which such Holder would hold on the date of such exercise had he been the holder of record of such Preferred Stock as of the date on which holders of Preferred Stock received or became entitled to receive such shares and/or all other additional stock and other securities and property. 4.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Preferred Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Preferred Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder hereof shall thereafter have the right to purchase and receive(in lieu of the shares of the Preferred Stock of

the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Preferred Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any such case, appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be possible, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. 4.4 Sale or Issuance Below Purchase Price. If the Company shall at any time or from time to time issue or sell any of its Common Stock, Preferred Stock, options to acquire (or rights to acquire such options), or any other securities convertible into or exercisable for Common Stock, for a consideration per share less than the Stock Purchase Price in effect immediately prior to the time of such issue or sale, the Stock Purchase Price then in effect and then applicable for any subsequent period or periods shall be adjusted in accordance with section A.5(d) of the Borrowers Certificate of Incorporation as applicable to holders of preferred stock. 4.5 Notice of Adjustment. Upon any adjustment of the Stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company. The notice shall be signed by the Company's chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.6 Other Notices. If at any time: (a) the Company shall declare any cash dividend upon its Preferred Stock;

(b) the Company shall declare any dividend upon its Preferred Stock payable in stock or make any special dividend or other distribution to the holders of its Preferred Stock; (c) the Company shall offer for subscription pro rata to the holders of its Preferred Stock any additional shares of stock of any class or other rights; (d) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; (e) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (f) the Company shall take or propose to take any other action, notice of which is actually provided to holders of the Preferred Stock; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 20 day's prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or other action, at least 20 day's written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Preferred Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or other action as the case may be. 4.7 Certain Events. If any change in the outstanding Preferred Stock of the Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of

the Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as it would have owned had the Warrant been exercised prior to the event and had it continued to hold such shares until after the event requiring adjustment. 5. Issue Tax. The issuance of certificates for shares of Preferred Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 6. Closing of Books. The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Preferred Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 7. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as a shareholder in respect of meetings of shareholders for the election of directors of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Preferred Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 8. No impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder hereunder. 9. Registration Rights. The Holder hereof shall be entitled, with respect to the shares of Common Stock issued upon conversion of such Preferred Stock, to all of the registration rights set forth in the Registration Rights Agreement dated as of April 2, 1996 to the same extent and on the same terms and conditions as possessed by the holders of

registration rights. The Company shall take such action as may be reasonably necessary to assure that the granting of such registration rights to the Holder does not violate the provisions of such agreement or any of the Company's charter documents or rights of prior Grantees of registration rights. 10. Market Stand-Off. If requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Holder shall not sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration, if any) for a period specified by the representative of the underwriters not to exceed one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act pertaining to the Company's initial public offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. 11. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Preferred Stock issued upon exercise of this Warrant, contained in Sections 6, 8 and 9 shall survive the exercise of this Warrant. 12. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 13. Notices. Except as otherwise provided in this Warrant agreement, any requirements for a notice, demand or request under this Warrant will be satisfied by a writing (a) hand delivered with receipt; (b) mailed by United States registered or certified mail or Express Mail, return receipt requested, postage prepaid; or (c) sent by Federal Express or any other nationally recognized overnight courier service, and addressed as follows: if to the Holder, at its address as shown on the books of the Company; and if to the Company, at the address indicated therefor in the first paragraph of this Warrant, Attn: Chief Financial Officer, with a copy to L. Kay Chandler, Esq., Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San Diego, California 92121. All notices that are sent in accordance with this Section 13 will be deemed received by the Holder or the Company on the earliest of the following applicable time periods: (i) the date the return receipt is executed; or (ii) the date delivered as documented by the overnight courier service or the hand delivery receipt. Either the Holder or the Company may designate a change of address by written notice to the other party. 14. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or

acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Preferred Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assign of the Holder hereof. The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof but at the Company's expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the shares of Common Stock) to which the Holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the Holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights. 15. Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware. 16. Lost Warrants or Stock Certificates. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 17. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. 18. Representations of Holder. With respect to this Warrant, Holder represents and warrants to the Company as follows: 18.1 Experience. It is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company; it understands that investment in the Warrant and, if the Warrant is exercised, the Preferred Stock (and Common Stock issuable upon conversion thereof) involves substantial risks; it has made detailed inquiries concerning the Company, its business and services, its officers and its personnel; the officers of the Company have made available to Holder any and all written information it has requested; the officers of the Company have answered to

Holder's satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by the Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and it is able to bear the economic risk of that investment. 18.2 Investment. It is acquiring the Warrant and, if the Warrant is exercised, the Preferred Stock (and Common Stock issuable upon conversion thereof) for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Warrant, the shares of Preferred Stock issuable upon exercise thereof and the shares of Common Stock issuable upon conversion of the Preferred Stock, have not been registered under the Securities Act nor qualified under applicable state securities laws. 18.3 Rule 144. It acknowledges that the Warrant, the Preferred Stock and the Common Stock must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act. 18.4 Access to Data. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the opportunity to inspect the Company's facilities. 19. Additional Representations and Covenants of the Company. The Company hereby represents, warrants and agrees as follows: 19.1 Corporate Power. The Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder. 19.2 Authorization. All corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance by the Company of this Warrant has been taken. This Warrant is a valid and binding obligation of the Company, enforceable in accordance with its terms. 19.3 Offering. Subject in part to the truth and accuracy of Holder's representations set forth in Section 18 hereof, the offer, issuance and sale of the Warrant is, and the issuance of Preferred Stock upon exercise of the Warrant and the issuance of Common Stock upon conversion of the Preferred Stock will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

19.4 Stock Issuance. Upon exercise of the Warrant, the Company will use its best efforts to cause stock certificates representing the shares of Preferred Stock purchased pursuant to the exercise to be issued in the individual names of Holder, its nominees or assignees, as appropriate at the time of such exercise. Upon conversion of the shares of Preferred Stock to shares of Common Stock, the Company will issue the Common Stock in the individual names of Holder, its nominees or assignees, as appropriate. 19.5 Certificate and By-Laws. The Company has provided Holder with true and complete copies of the Company's Certificate of Incorporation, By-Laws, and each Certificate of Determination or other charter document setting, forth any rights, preferences