<PAGE>

                                                                   EXHIBIT 10.27


            THIS EMPLOYMENT AGREEMENT is made July 7, 1999

AMONG:

            VISIBLE GENETICS CORPORATION, a corporation duly incorporated under
            the laws of the State of Delaware and having its principal office in
            the City of Pittsburgh, in the State of Pennsylvania,

            (the "Employer")

                                      -and-

            VISIBLE GENETICS INC., a corporation duly incorporated under the
            laws of the Province of Ontario and having its head office in the
            City of Toronto, in the Province of Ontario,

            ("VGI"),

                                      -and-

            RICHARD DALY, an individual residing in the City of San Francisco,
            in the State of California,

            (the "Executive")

RECITALS:

A.    The Employer is a wholly owned subsidiary of VGI.

B.    The  Executive has been  employed by the Employer  effective  April 1,
      1999.

C.    The Executive was appointed as President and Chief  Executive  Officer
      of VGI effective July 7, 1999.

D.    VGI and the  Employer  are parties to a  Secondment  Agreement,  under
      which the Executive may be seconded to VGI from time to time.


<PAGE>
                                     - 2 -


E.    The Employer and  Executive  wish to set out the terms and  conditions
      of employment.

      THEREFORE, the parties agree as follows:

                                    ARTICLE 1
                        POSITION, DUTIES AND REMUNERATION

1.1   Employment

Subject to the provisions of Section 5 hereof, the Employer agrees to continue
to employ the Executive and the Executive agrees to remain in the employ of the
Employer and to act as President and Chief Executive Officer ("CEO") of VGI. The
Executive will be paid a gross salary of U.S. two hundred and twelve thousand
dollars (U.S. $212,000.00) paid in equal monthly installments.

1.2   DUTIES

The Executive agrees to perform faithfully the duties of President and CEO and
all other lawful instructions and duties as the Employer or VGI may from time to
time reasonably require commensurate with his position.

1.3   FULL TIME AND ATTENTION

The Executive agrees to use his best efforts to promote the interests of the
Employer and VGI; to devote his full time and attention to the business of the
Employer and VGI and to adhere to the instructions and directives of the
Employer and VGI.

1.4   EMPLOYMENT CONDITIONS

The Executive agrees to adhere to and abide by the Employer's policies, as
amended from time to time, regarding holidays, sick leave, hospital insurance,
and other fringe benefits. The Executive shall be bound by and shall faithfully
observe and abide by all of the rules and


<PAGE>
                                     - 3 -


obligations of the Employer from time to time in force which are brought to his
notice, or of which he should reasonably be aware of.

1.5   ANNUAL REVIEW

The Employer agrees in its sole discretion to review the salary and benefits
payable to Executive hereunder annually.

1.6   BENEFITS

In addition to salary, for the performance of his services hereunder, the
Executive shall be entitled to participate in all of the Employer's benefit
plans generally available to its Executives, including group, life, medical,
dental, hospital, long-term disability, accidental death and dismemberment
insurance benefits plans. In the event the Employer adopts any new benefit
plans, pensions or perquisites, the Executive shall have the right to
participate on a basis equivalent to other Executives of the Employer. All plans
are governed by their terms.

1.7   REIMBURSEMENT FOR EXPENSES

Provided that the Executive submits receipts satisfactory to either the Chair of
the Board of Directors of the Employer (the "Board") or the Chair of the
Compensation Committee of the Board, the Employer shall reimburse the Executive
forthwith for all proper and reasonable out-of-pocket expenses actually incurred
by the Executive in the performance of his duties, including all
business-related travel expenses.

1.8   APARTMENT ACCOMMODATION

The Employer shall make available to the Executive apartment accommodation for
the occasions in which the Executive must travel for business-related reasons to
Toronto.


<PAGE>
                                     - 4 -


1.9   TAX MATTERS

      (a)   The Employer will provide the Executive with up to Canadian ten
            thousand dollars (Cdn. $10,000.00) in order that the Executive may
            obtain income tax advice.

      (b)   The Employer will reimburse the Executive with reasonable expenses
            each year for income tax return preparation.

      (c)   To receive all or part of the amounts set out in 1.9(a) or (b), the
            Executive must present receipts satisfactory to the Employer
            describing the nature of the services provided and the fees charged
            in respect of such services.

1.10  VACATION

The Executive shall be entitled to five (5) weeks' vacation with pay each
calendar year. The scheduling of any vacation time must be approved by the
Employer. Vacation time will not be accumulated from year to year. Rather,
unused entitlement will be forfeited; provided, however, that the Employer will
provide any vacation pay entitlements pursuant to applicable employment
standards legislation.


                                   ARTICLE 2
      CONFIDENTIAL INFORMATION, NON-COMPETITION/NON-SOLICITATION DURING AND
                       FOLLOWING TERMINATION OF EMPLOYMENT

2.1   DEFINITIONS

In this Article 2 , the following terms shall have the meaning set out below:

      (a)   "Confidential Information" - shall include:

            (i)   Trade Secret Information;

            (ii)  all other proprietary and confidential information concerning
                  the business and affairs of the Employer, including,
                  management methods, operating techniques and procedures,
                  financial and sales information, supplier and client data, and
                  information disclosed in confidence to the Employer by a third
                  party; and

            (iii) all Inventions,

            but  Confidential  Information  shall  not  include  information
            which the Executive can demonstrate:


<PAGE>
                                     - 5 -


            (i)   was in the public domain or becomes so through no fault of the
                  Executive; or

            (ii)  was disclosed to the Executive by a third party not under an
                  obligation to the Employer to maintain the confidence of such
                  information.

      (b)   "Inventions" - shall mean any improvement, modification or
            enhancement of any Trade Secret Information together with any other
            Trade Secret Information which the Executive may make, develop,
            devise, author or otherwise be involved with, alone or jointly with
            others, which is, regardless of whether or not the Employer's
            resources or assets are used, conceived or made wholly or partly by
            reason of opportunities afforded by the Employer, or with knowledge
            gained through employment by the Employer (whether perfected or
            reduced to specific form either prior to the date of this Agreement
            or during or subsequent to his employment with the Employer) or
            which:

            (i)   the Executive makes, develops, devises, authors or is
                  otherwise involved with during the term of his employment with
                  the Employer, on or off the Employer's premises, during or
                  after normal business hours;

            (ii)  utilizes any Trade Secret Information of the Employer; or

            (iii) does not utilize any Trade Secret Information of the Employer
                  but is made, developed, devised or authored to a substantial
                  extent during the time which should properly be devoted by the
                  Executive to the affairs and the business of the Employer.

      (c)   "TradeSecret Information" - shall mean all information relating to
            the business of the Employer including, but not limited to, all
            software systems, and design documents, formulae, processes,
            research techniques and results and instructions in oral form or any
            media including electronic, chart, graphic or written form.

      "Employer" shall mean VGI and its affiliates, collectively.

2.2   CONFIDENTIALITY

The Executive acknowledges that he is employed in a position of trust and has
fiduciary obligations to the Employer and VGI. The Executive covenants that
during his employment by the Employer and after the termination of such
employment, the Executive shall not, for any reason, directly or indirectly:

      (a)   apply or use any part of the Confidential Information including the
            Inventions except for the benefit of the Employer;


<PAGE>
                                     - 6 -


      (b)   divulge or disclose to any person, firm or corporation any part of
            the Confidential Information including the Inventions, except with
            the prior written consent of the Employer, and the Executive shall
            only make such disclosure to:

            (i)   directors, officers, Executives and consultants of the
                  Employer on a "need-to-know" basis only as the Executive may
                  be authorized from time to time by the proper officers of the
                  Employer; or

            (ii)  as required to do so as a matter of law, pursuant to any
                  subpoena or order issued by a court of competent jurisdiction
                  or any competent governmental authority, provided the
                  Executive shall promptly notify the Employer of any such order
                  or requirement, consult with the Employer on the advisability
                  of resisting such order and co-operate with the Employer in
                  attempting to obtain an order protecting the confidence of any
                  information to be disclosed;

      (c)   publish information relating to the Inventions except with the prior
            written consent of the Employer; or

      (d)   copy or remove from the Employer's premises any part of the
            Confidential Information including the Inventions, in electronic or
            physical form, except documents which:

            (i)   are not Trade Secret Information; and

            (ii)  in the ordinary course of business, the Executive would
                  reasonably be expected to perform work on at home or in the
                  course of business travel.

Upon request or upon termination of his employment by the Employer, the
Executive shall surrender to the Employer all originals and copies of any media
of any and all Confidential Information including Inventions which may be in his
possession, and the Executive acknowledges and agrees that upon termination of
his employment, the Executive has an obligation to make such surrender with or
without the express demand of the Employer.

2.3   NON-COMPETITION

During the term of this Agreement and for a period of twelve (12) months
thereafter, the Executive shall not, either individually or in partnership or
jointly or in conjunction with any person as principal, agent, Executive,
shareholder (other than a holder of shares listed on the Canadian or United
States stock exchange where such holdings do no exceed two percent (2%)


<PAGE>
                                     - 7 -


of the outstanding shares so listed), anywhere within Canada or the United
States of America, the United Kingdom or Europe:

      (a)   solicit any clients or potential clients of the Employer for any
            business that competes directly or indirectly with the business of
            the Employer, except on behalf of the Employer; or

      (b)   in any manner whatsoever carry on or be engaged in, or be concerned
            with or interested in, or advise, lend money to, guarantee the debts
            or obligations of, or permit his name or any party thereof to be
            used or employed by any person engaged in or concerned with or
            interested anywhere in any business that competes directly or
            indirectly with the business of the Employer.

For the purposes hereof the business of the Employer shall be defined to mean
molecular diagnostic systems, including software instrumentation, and molecular
methods, or DNA sequencing technology. This includes, but is not limited to any
high speed DNA sequencer or any DNA sequencer that uses an ultra-thin gel
cassette, or DNA analysis software that is assay based. This excludes any
service-based diagnostic business, or not-for-profit research associated with
clinical diagnostics that might use such molecular diagnostic systems, but does
include any business that supplies software, instrumentation of supplies that
compete with the Employer's products in development or being sold at the time of
the Executive's termination or voluntary leaving.

2.4   INVENTIONS

The Executive shall promptly disclose to the Employer all Inventions as the
Executive becomes aware of them. The Executive acknowledges and agrees that as
between the Employer and Executive, all trade secrets, copyright, patents or
other intellectual property rights which may subsist in the said Inventions
shall be and shall remain the sole and exclusive property of the Employer, and
the Employer shall be free to adopt the Inventions. The Executive hereby waives
in favour of the Employer his moral rights in all such Inventions. Both during
the following his employment, the Executive will execute any documents that the
Employer may present to him


<PAGE>
                                     - 8 -


including applications to register intellectual property rights and assignment
documents, and shall do all such other things as the Employer may require of the
Executive from time to time to afford full and complete protection to the
above-stated property rights of the Employer in and to the Inventions, all at
the sole expense of the Employer.

The Executive shall not at any time contest directly or indirectly the
ownership, validity or enforceability of intellectual property rights subsisting
in such Inventions.

2.5   CORPORATE OPPORTUNITIES

Any business opportunities related to the business of the Employer which become
known to the Executive during his employment hereunder must be fully disclosed
and made available to the Employer by the Executive, and the Executive agrees
not to take or attempt to take any benefit of such opportunity except on behalf
of the Employer unless the Employer declines in writing to pursue such
opportunity.

2.6   RIGHTS OF ENFORCEMENT

The Executive hereby agrees that all restrictions, including but not limited to
business scope, geographic area and period of time, in this Agreement are
reasonable and valid in view of the nature of the business of the Employer.

The Executive further agrees that the remedy at law for any breach by him of the
confidentiality or non-competition provisions of this Agreement will be
inadequate. The Employer or any related corporation, on any application to a
court of competent jurisdiction, shall be entitled to injunctive relief against
the Executive to enforce the terms of Article 2 of this Agreement without the
necessity of proving actual damage to the Employer or its related corporations.


<PAGE>
                                     - 9 -

                                   ARTICLE 3
                            TERMINATION OF EMPLOYMENT

3.1   DEATH

The Executive's employment shall terminate automatically in the event of the
death of the Executive and the Executive's estate shall not be entitled to
receive any further compensation under this Agreement other than any amounts
that may have accrued to the date of the Executive's death. Notwithstanding the
foregoing, shares subject to the First and Second Options or portions thereof
shall continue to be released from escrow pursuant to the Escrow Agreement for
twelve (12) calendar months following the date of the Executive's death and the
Executive's estate will also be entitled to receive one months' salary
multiplied by the number of months in the Severance Period set out in Subsection
3.4.

3.2   DISABILITY

The Executive's employment shall terminate upon the last day of any period of
six (6) months during which the Executive has been continuously disabled from
performing his employment duties. The Executive shall not be entitled to receive
any further compensation under this Agreement other than any amounts that may
have accrued to the date of the Executive's termination of employment under this
Section 3.2. Notwithstanding the foregoing, shares subject to the First and
Second Options or portions thereof shall continue to be released from escrow
pursuant to the Escrow Agreement for twelve (12) calendar months following the
date of the Executive's termination of employment under this Section 3.2, and
the Executive will also be entitled to receive one months' salary multiplied by
the number of months in the Severance Period set out in Subsection 3.4.


<PAGE>
                                     - 10 -


3.3   CAUSE

Notwithstanding any other provisions of this Agreement, the Employer or VGI may
terminate this Agreement at any time, without notice, for Cause. The term
"Cause" as used herein shall mean any material breach of fiduciary obligation or
gross insubordination.

3.4   TERMINATION FOR ANY REASON

Notwithstanding any other provision in this Agreement, the Employer may
terminate the Executive's employment at any time for any reason by providing the
Executive with one (1) months' salary multiplied by the number of months in the
Severance Period. The "Severance Period", as used in this Agreement, means:

      (a)   if Executive is terminated by Employer prior to April 1, 2000,
            twelve (12) months; or

      (b)   if the Executive is terminated after April 1, 2000, twelve (12)
            months' notice, plus one (1) additional month for each full year of
            employment with Employer after April 1, 2000 but shall not exceed a
            total of eighteen (18) months.

The Executive agrees that such pay in lieu of notice will fully satisfy the
Employer's obligations at common law and no further payments will be owing to
him by the Employer or VGI. The parties have negotiated the duration of the
Severance Period and it forms part of the consideration given by the Executive
for his salary.

3.5   STATUTORY COMPLIANCE

Any payment under Section 3.4 is subject to deductions required by law and
includes any entitlement the Executive may have to notice of termination,
termination pay or severance under the EMPLOYMENT STANDARDS ACT (Ontario) or any
similar legislation. The Executive shall have no claim against the Employer or
VGI for any further liability to make payments in connection with the
termination of the Executive's employment, other than those arising from Section
3.4 of this Agreement.


<PAGE>
                                     - 11 -


3.6   RESIGNATION

The employment of the Executive may be terminated by the Executive for any
reason upon prior written notice to the Employer of one hundred and eighty (180)
days.

3.7   RETURN OF EMPLOYER PROPERTY

Upon termination of employment for whatever reason, the Executive will promptly
return to the Employer, in good condition, all items of any and every nature or
kind used by him in the course of his employment, or otherwise furnished to him
by the Employer or VGI, including without limitation all equipment, credit
cards, computers, cellular phones, fax machines, books, records, reports, files,
manuals, literature, software, confidential information or other materials
belonging to the Employer or an affiliated company.

3.8   BENEFIT TERMINATION

Upon termination of employment, all benefits provided under this Agreement shall
cease as permitted by applicable employment standards legislation, provided that
if the Executive's employment is terminated by the Employer under Section 3.4,
benefits provided under this Agreement shall continue for the duration of the
Severance Period.


                                   ARTICLE 4
                GRANT OF OPTIONS TO PURCHASE COMMON SHARES OF VGI

4.1   THE FIRST OPTION

The Executive was granted an option (the "First Option") by VGI on April 1, 1999
to purchase fifty thousand (50,000) common shares of VGI at an exercise price of
U.S. nine dollars, ten cents (US $9.10) per share. Subject to Article 5 and the
provisions of the attached Escrow Agreement, the Executive has the right to
exercise the First Option with respect to all or any part of the shares subject
to the First Option at any time or times prior to the close of business on March
31, 2009. In accordance with the provisions of the Escrow Agreement, one
thousand three hundred


<PAGE>
                                     - 12 -


and eighty eight (1,388) shares shall be released from escrow on the first day
of every calendar month between May 1, 1999 and March 1, 2002 and the remaining
one thousand four hundred and twenty (1,420) shares shall be released from
escrow on April 1, 2002.

4.2   THE SECOND OPTION

The Executive was granted an additional option (the "Second Option") by VGI on
July 7, 1999, to purchase four hundred thousand (400,000) common shares of VGI
at an exercise price of U.S. eleven dollars (US $11.00) per common share.
Subject to the provisions of Article 5 and the attached Escrow Agreement, the
Executive has the right to exercise the Second Option with respect to all or any
part of the shares subject to the Second Option at any time or times prior to
the close of business on July 6, 2009. In accordance with the provisions of the
Escrow Agreement, one hundred thousand (100,000) shares shall be released from
escrow on July 7, 2000, eight thousand three hundred and thirty three (8,333)
shares shall be released from escrow on each of August 7, 2000 and the seventh
day of every calendar month thereafter until June 7, 2003, and eight thousand
three hundred and forty five (8,345) shares shall be released from escrow on
July 7, 2003.

4.3   THE ESCROW AGREEMENT

Subject to Article 5, the First Option and the Second Option (collectively, the
"Options") and all shares issued upon the exercise of the Options shall be held
subject to the escrow agreement attached hereto as Schedule "A" (the "Escrow
Agreement").


                                   ARTICLE 5
     EFFECT OF TERMINATION OF EMPLOYMENT ON THE FIRST OPTION AND THE SECOND
                                     OPTION

5.1   TERMINATION

      (a)   The First Option.


<PAGE>
                                     - 13 -


            (i)   Subject to Section 5.3:

                  (A)   if the Executive resigns employment with the Employer
                        prior to April 1, 2002, or is terminated for Cause in
                        accordance with Section 3.3, the Executive shall be
                        entitled only to receive those shares issued or issuable
                        upon exercise of the First Option that have been
                        released from escrow pursuant to the Escrow Agreement on
                        or before the date of termination.

                  (B)   if the Executive is terminated without Cause prior to
                        April 1, 2000, the Executive shall be entitled to
                        receive those shares issued or issuable upon exercise of
                        the First Option that have been released from escrow
                        pursuant to the Escrow Agreement on or before the date
                        of termination, plus those shares that would have been
                        released from escrow pursuant to the Escrow Agreement
                        had the Executive continued to be employed beyond the
                        date of termination for the number of months in the
                        Severance Period plus an additional six (6) months (and
                        those shares that would have been released from escrow
                        pursuant to the Escrow Agreement during such period
                        shall be deemed to have been released from escrow
                        pursuant to the Escrow Agreement in such circumstances
                        for all purposes of this Agreement and the Escrow
                        Agreement);

                  (C)   if the Executive is terminated without Cause after April
                        1, 2000, the Executive shall be entitled to receive
                        those shares issued or issuable upon exercise of the
                        First Option that have been released from escrow
                        pursuant to the Escrow Agreement on or before the date
                        of termination, plus those shares that would have been
                        released from escrow pursuant to the Escrow Agreement
                        had the Executive continued to be employed beyond the
                        date of termination for the number of months in the
                        Severance Period (and those shares that would have been
                        released from escrow pursuant to the Escrow Agreement
                        during such period shall be deemed to have been released
                        from escrow pursuant to the Escrow Agreement in such
                        circumstances for all purposes of this Agreement and the
                        Escrow Agreement);

                  (D)   to the extent of the portion of the First Option that
                        has not been exercised for the full number of shares
                        which may be released from escrow pursuant to the Escrow
                        Agreement to the Executive in accordance with the
                        provisions of this Subsection 5.1(a), that portion of
                        the First Option will remain exercisable and the
                        remaining portion of the First Option will be cancelled;
                        and

                  (E)   If the Executive's employment is terminated, VGI shall
                        have the right to purchase for cancellation for a price
                        equivalent to the exercise price paid by the Executive
                        any shares issued pursuant to the exercise of the First
                        Option which have not been released from


<PAGE>
                                     - 14 -


                        escrow pursuant to the Escrow Agreement (taking into
                        account the terms of this Section).

      (b)   The Second Option.

            (i)   Subject to Section 5.3:

                  (A)   if the Executive resigns employment with the Employer or
                        is terminated for Cause in accordance with Section 3.3
                        prior to July 7, 2000, the Executive shall have no right
                        to purchase any shares pursuant to the Second Option and
                        the Second Option will expire on the date of such
                        resignation or termination;

                  (B)   if the Executive resigns employment with the Employer,
                        or is terminated for Cause in accordance with Section
                        3.3 on or after July 7, 2000 and prior to July 7, 2003,
                        the Executive shall be entitled to receive those shares
                        issued or issuable upon exercise of the Second Option
                        that have been released from escrow pursuant to the
                        Escrow Agreement on or before the date of termination;
                        and

                  (C)   if the Executive is terminated by the Employer without
                        Cause prior to July 7, 2003, he shall be entitled to
                        receive those shares issued or issuable upon exercise of
                        the Second Option that have been released from escrow
                        pursuant to the Escrow Agreement on or before the date
                        of termination plus those shares that would have been
                        released from escrow pursuant to the Escrow Agreement
                        had the Executive continued to be employed beyond the
                        date of termination for the number of months in the
                        Severance Period (and those shares that would have been
                        released from escrow pursuant to the Escrow Agreement
                        during such period shall be deemed to have been released
                        from escrow pursuant to the Escrow Agreement in such
                        circumstances for all purposes of this Agreement and the
                        Escrow Agreement);

                  (D)   to the extent of the portion of the Second Option that
                        has not been exercised for the full number of shares
                        which may be released from escrow pursuant to the Escrow
                        Agreement to the Executive in accordance with the
                        provisions of this Subsection 5.1(b), that portion of
                        the Second Option will remain exercisable and the
                        remaining portion of the Second Option will be
                        cancelled; and

                  (E)   If the Executive's employment is terminated, VGI shall
                        have the right to purchase for cancellation for a price
                        equivalent to the exercise price paid by the Executive
                        any shares issued pursuant to the exercise of the Second
                        Option which have not been released from escrow pursuant
                        to the Escrow Agreement (taking into account the terms
                        of this Section).


<PAGE>
                                     - 15 -


5.2   ADDITIONAL OPTIONS

Additional options may be granted to Executive by Employer from time to time on
a performance basis, at the sole discretion of Employer.

5.3   ACCELERATED RELEASE FROM ESCROW

The Escrow Agreement provides for an immediate release from escrow upon a Change
of Control in certain circumstances. For purposes of this Agreement and the
Escrow Agreement, a "Change of Control" shall mean:

      (a)   any transaction or series of related transactions (including a
            merger or consolidation) by a person or persons acting in concert or
            combination as a result of which the holders of voting capital stock
            of VGI immediately prior to such transaction(s) own less than fifty
            percent (50%) of the outstanding voting capital stock of VGI
            immediately subsequent to such transaction(s); or

      (b)   an agreement for the sale or disposition of all or substantially all
            of the assets of VGI to an arm's length third party that is not an
            affiliate of VGI;

      provided that no Change of Control shall be deemed to have occurred for
      purposes of this Agreement or the Escrow Agreement by virtue of any
      transaction which results in the Executive or an entity in which the
      Executive has a one-quarter of one percent (.25%) or greater equity
      interest, either singly, or acting as a joint actor with a group of
      entities or persons, becoming the beneficial owner, directly or indirectly
      of twenty-five percent (25%) or more of the combined voting power of VGI's
      voting securities.

5.4   STATUS OF AND PAYMENT FOR OPTIONS

The Options are issued pursuant to VGI's Employee Share Option Plan, as amended.
The Options are intended to qualify as "incentive stock options" under Section
422 of the Internal Revenue Code of 1986, as amended, to the extent that they
quality as such thereunder. Subject to applicable law, stock purchased upon
exercise of any of the Options may be paid for, and any withholding obligation
on the part of the Executive in connection with the exercise of any of the
Options may be satisfied, at the Executive's election:

      (a)   in cash or by cheque made payable to the order of VGI in the amount
            of such exercise price or withholding obligation, as the case may
            be;


<PAGE>
                                     - 16 -


      (b)   through the delivery of shares of stock of VGI having a fair market
            value on the date of exercise equal to the amount of such exercise
            price or withholding obligation, as the case may be;

      (c)   by delivery of an unconditional and irrevocable undertaking by a
            broker to deliver promptly to VGI sufficient funds to pay the
            exercise price or such withholding obligation, as the case may be;

      (d)   by the surrender for cancellation of options to purchase such
            number of shares of stock of VGI as is equal to

            (i)   the amount of such exercise price or withholding obligation,
                  as the case may be, divided by

            (ii)  the fair market value on the date of exercise of one share
                  of stock inus the exercise price of one share of stock
                  under the option so ancelled; or

      (e)   by any combination of the above permissible forms of payment,

provided, however, that the Executive may not use shares issued or issuable upon
exercise of the Options in payment of the exercise price or satisfaction of the
withholding obligation, as the case may be, unless and until such shares have
been or are capable of being released from escrow pursuant to the Escrow
Agreement at the time of exercise or satisfaction. Whether or not they were ever
issued, the number of shares previously subject to the Escrow Agreement that
have, pursuant to this Section 5.4, been used as payment for the exercise price
or satisfaction of the withholding obligation, as the case may be, shall not
thereafter be available for release from escrow.


                                   ARTICLE 6
                               CONTRACT PROVISIONS

6.1   HEADINGS

The headings of the Sections herein are inserted for convenience of reference
only and shall not affect the meaning or constructions hereof.


<PAGE>
                                     - 17 -


6.2   WITHHOLDING

All payments under this Agreement shall be subject to withholding of such
amounts, if any, relating to tax or other payroll deductions as the Employer may
reasonably determine and should withhold pursuant to any applicable law or
regulation.

6.3   COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.

6.4   WAIVER

The failure of any party to enforce its rights under this Agreement at any time
for any period shall not be construed as a waiver of such rights and a waiver
shall only be construed as such if made in writing signed by a duly authorized
representative of the waiving party.

6.5   SEVERABILITY

If any provision of this Agreement or application of any such provision to any
person or circumstances shall be invalid under the law of any jurisdiction the
remainder of this Agreement or the application of such provision to persons or
circumstances other than those as to which it is invalid shall not be effected
thereby.

In the event a court of competent jurisdiction rules any provision of this
Agreement to be invalid, then such ruling shall have no effect on the remaining
provisions of this Agreement and they shall continue in full force and effect.

6.6   ENTIRE AGREEMENT

This Agreement, together with Schedules "A" and "B", contains the entire
contract of Employment between the parties hereto and supersedes and replaces
all previous negotiations,

<PAGE>
                                     - 18 -


understandings and agreements whether verbal or written with respect to any
matters herein referred to, including the agreement between the parties
effective April 1, 1999.

6.7   GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein. Each of the
parties hereby irrevocably attorns to the jurisdiction of the courts of the
Province of Ontario with respect to any matters arising out of this Agreement.

6.8   SURVIVAL

The provisions of Articles 2, 3, 4, and 5 hereof shall survive the termination
of this Agreement for the periods of time specified or contemplated therein.

6.9   DIRECTORS AND OFFICERS

If the Executive is a director or officer at the relevant time, the Executive
agrees that after termination of his employment with the Employer for any
reason, he will tender his resignation from any position he may hold as an
officer or director of the Employer or any of its affiliated or associated
companies.

6.10  TAX EQUALIZATION

The Employer agrees to pay a cost of living supplement, such supplement to
include an equalization payment to be made by the Employer in the event that the
net after tax income in respect of the Executive's employment pursuant to the
Secondment Agreement is less than the net after tax income which would have
resulted had the all the Executive's salary and any sums paid by way of bonus
been taxed only in the jurisdiction in which they would otherwise have been
taxed, but for the Executive's secondment pursuant to the Secondment Agreement.
Such


<PAGE>
                                     - 19 -


equalization payment shall be in an amount such that, after tax, it will equal
the shortfall in net after tax income.


                                   ARTICLE 7
                                  MISCELLANEOUS

7.1   NO BREACH OF THIRD PARTY AGREEMENT

The Executive covenants and acknowledges with the Employer that by entering into
this Agreement he will not be in breach of any agreement with any third party.

7.2  INDEMNIFICATION AGREEMENT

The Employer and Executive agree to enter into an Indemnification Agreement
attached hereto as Schedule "B".

7.3   ARBITRATION

Any dispute, controversy, claim or difference between the parties hereto arising
out of Article 3 including questions of fact, procedures, practices or standards
relevant to Article 3 of this Agreement which cannot be resolved or settled by
the parties, shall be settled and determined by arbitration. The provisions of
this Section shall be deemed to constitute a "submission" within the meaning of
the ARBITRATIONS ACT (Ontario) (the "Act") and the provisions of the Act, except
to the extent that a contrary intention is expressed herein, shall apply to any
arbitration hereunder. Either party may at any time give written notice to the
other of its desire to submit such dispute to arbitration stating with
reasonable particularity the subject matter of such dispute. Within five (5)
business days after receipt of such notice, the parties shall appoint a single
arbitrator with appropriate experience to determine such dispute. If the parties
fail to appoint an arbitrator either party may apply to a Judge of the Superior
Court of Ontario to appoint an arbitrator to determine such dispute. The
arbitrator so appointed shall forthwith proceed to arbitrate the dispute. The
award of the arbitrator shall be delivered to the parties within sixty (60) days
of his appointment.
<PAGE>
                                     - 20 -


The costs of the arbitration shall be paid as determined by the arbitrator.
Notwithstanding anything to the contrary contained in the Act, the award of the
arbitrator shall be final and binding upon the parties and all persons claiming
through or under them. An award of the arbitrator shall be in substitution for
and precludes either party or any person claiming through or under a party to
bring any suit, action or other proceeding in any court of law or equity against
either party or any person claiming through or under a party or against the
arbitrator in respect of any matter for which arbitration is herein provided.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction and thereupon execution or other legal process may issue
thereon. The parties hereto and all persons claiming through or under them
hereby attorn to the jurisdiction of the arbitrator and to the jurisdiction of
any court in which the judgment may be entered. Arbitration may not be waived
except upon delivery by the parties of a written notice to that effect.

      THIS Agreement is binding upon and is for the benefit of the parties and
their respective successors.

      IN WITNESS OF WHICH the Parties have duly executed this Agreement.

                                         VISIBLE GENETICS INC.

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

<PAGE>
                                     - 21 -


                                         VISIBLE GENETICS CORPORATION

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:


SIGNED, SEALED & DELIVERED
In the presence of:



-------------------------------------        -----------------------------------
              Witness                                   Richard Daly


<PAGE>


                                                                      SCHEDULE A

            THIS ESCROW AGREEMENT is made July 7, 1999

AMONG:

            GOLDMAN,  SPRING,  SCHWARTZ  &  KICHLER,  Barristers
            and Solicitors,

            (the "Escrow Agent"),

                                      -and-

            VISIBLE    GENETICS   INC.,   a   corporation   duly
            incorporated  under  the  laws  of the  Province  of
            Ontario  and having  its head  office in the City of
            Toronto, in the Province of Ontario,

            ("VGI"),

                                     - and -

            VISIBLE GENETICS CORPORATION, a corporation duly incorporated under
            the laws of the State of Delaware, and having its principal office
            in the City of Pittsburgh, in the State of Pennsylvania,

            (the "Employer")

                                      -and-

            RICHARD DALY, an individual residing in the City
            of San Francisco, in the State of California,

            (the "Employee").



RECITALS:

A.    The Employee has been granted an option (the "First Option") to purchase
      Fifty Thousand (50,000) common shares in the capital of VGI effective
      April 1, 1999.

B.    The Employee has been granted an additional option (the "Second Option",
      collectively, with the First Option, the "Options") to purchase Four
      Hundred Thousand (400,000) common shares in the capital of VGI effective
      July 7, 1999.

C.    As a condition to acquiring the Shares (as defined below) the Employee is
      required to enter into this Escrow Agreement on the terms and conditions
      hereinafter set forth.

D.    Each of the  Employer  and VGI agree to  employ  its best  efforts  to
      ensure that the terms and  conditions  of this  agreement are complied
      with.


<PAGE>
                                     - 2 -


E.    The  Escrow  Agent has  agreed to  undertake  and  perform  its duties
      according to the terms and conditions of this agreement.

      NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
aforesaid agreements, the mutual covenants and conditions herein contained and
other good and valuable consideration, the Employee covenants and agrees with
the Employer and VGI and the Employer and VGI and the Escrow Agent covenant and
agree with each other and with the Employee as follows:

1.          In this Agreement:

            "Shares"  shall  mean  up  to  Fifty  Thousand  (50,000)  common
shares of VGI  issuable to the  Employee  upon the due exercise of the First
Option at U.S.  nine  dollars  and ten cents (U.S.  $9.10) per common  share
and up to Four Hundred  Thousand  (400,000) common shares of VGI issuable to
the  Employee  upon the due  exercise  of the Second  Option at U.S.  eleven
dollars (U.S. $11.00) per common share.

2.             Subject to the Employment Agreement effective July 7, 1999 (the
"Employment Agreement") between the Employer and the Employee, the Options and,
upon any exercise of the Options, the Shares issuable pursuant to such exercise,
shall be deposited in escrow with the Escrow Agent.

3.             Subject to the Employment Agreement, Shares and Options to
purchase Shares will be released from escrow as follows:

      (a)   of the Fifty Thousand (50,000) Shares to be issued to the Employee
            pursuant to the First Option, subject to subsection 3(d) of this
            Agreement, one thousand three hundred and eighty eight (1,388)
            Shares shall be released by the Escrow Agent, from the escrow hereby
            created on the first day of every calendar month between May 1, 1999
            and March 1, 2002, and the remaining one thousand four hundred and
            twenty (1,420) Shares shall be released by the Escrow Agent from the
            escrow hereby created on April 1, 2002;

      (b)   of the Four Hundred Thousand (400,000) Shares to be issued to the
            Employee pursuant to the Second Option, subject to subsection 3(d)
            of this Agreement, one hundred thousand (100,000) Shares shall be
            released by the Escrow Agent, from the escrow hereby created, on
            July 7, 2000, and eight thousand three hundred and thirty three
            (8,333) Shares shall be released by the Escrow Agent, from the
            escrow hereby created, on each of August 7, 2000 and the seventh day
            of every calendar month thereafter until June 7, 2003, and eight
            thousand three hundred and forty five (8,345) Shares shall be
            released by the Escrow Agent, from the escrow hereby created, on
            July 7, 2003;

      (c)   if, pursuant to the provisions of Section 5.1 of the Employment
            Agreement, VGI purchases from the Employee Shares that have not yet
            been released from escrow, VGI will pay to the Employee for such
            Shares the amount paid by the Employee for such Shares; and


<PAGE>
                                     - 3 -


      (d)   upon the occurrence of a "Change of Control" (as defined in the
            Employment Agreement):

            (i)   during the Employee's active employment by the Employer; or

            (ii)  within ninety (90) days of the date of termination of the
                  Employee's employment with the Employer for a reason other
                  than Cause (as defined in the Employment Agreement),

            all Shares will be released from escrow immediately (and a Change of
            Control described in (ii) shall be deemed to have occurred as of,
            and the release of Shares from escrow shall be effective as of the
            date of such termination of the Employee's employment with the
            Employer).

4.    (a)   Until such time as any Shares are released from the escrow hereby
            created, the parties hereto agree that the unreleased Shares and the
            beneficial ownership or any interest in them shall not, subject to
            this Agreement and the Employment Agreement, be able to be sold,
            assigned, hypothecated, alienated, transferred, pledged, or
            otherwise in any manner dealt with.

      (b)   The term "Shares" as used herein shall include any shares or other
            securities or capital property which shall result from either:

            (i)   a consolidation, change, classification, reclassification or
                  subdivision, as the case may be, of any of the Shares; or

            (ii)  every organization, liquidation, dissolution, winding up,
                  amalgamation, merger, arrangement, continuation or
                  continuance, as the case may be, of VGI,

            and in any such event, all such shares or other securities or
            capital property and all certificates or other instruments or
            documents representing any such shares or other securities or
            capital property received in substitution for or in respect of the
            Shares shall be immediately delivered to the Escrow Agent to be held
            as part of the Shares on the terms and conditions herein set out.

5.             Until such time as the Shares are released from the escrow hereby
created, the Employee hereby directs the Escrow Agent to retain the unreleased
Shares, and not to do or cause anything to be done to release the same from
escrow or to allow any transfer, hypothecation, or alienation thereof except in
accordance with the provisions hereof. The Escrow Agent hereby accepts the
responsibilities hereby placed on it and agrees to perform the same in
accordance with the terms hereof.

6.             The Employee shall be entitled to all rights (including voting
rights and the right to receive any dividends which may be declared) attached to
the Shares except any of those rights which may be expressly abrogated by this
Agreement.

7.             The Employer and VGI hereby acknowledge the terms and conditions
of this Agreement and agree to take all reasonable steps to facilitate its
performance.


<PAGE>
                                     - 4 -


8.             The release from escrow of any of the Shares pursuant to the
terms of this Agreement shall terminate this Agreement only in respect to those
Shares so released.

9.             Subject as herein provided, the Employee hereby irrevocably
appoints the Escrow Agent its attorney for the purpose of cancelling, selling,
assigning, or transferring any portion of the Shares upon receipt of any
consent, order or direction of VGI and for the purpose of executing any
necessary documents relating to such cancellation, selling, assignment or
transfer, and with authority to substitute one or more persons with like full
power. Such power is hereby declared by the Employee to be an irrevocable power
coupled with an interest and duty and shall survive any legal or mental
incapacity of the Employee.

10.            Notice of any consent, order or direction of the Employer
affecting the Shares shall be given by the Escrow Agent to all persons or
parties affected thereby at their last known registered address.

11.            The parties hereto agree that in consideration of the premises
and of the Escrow Agent agreeing to act in such capacity, the Employee and the
Employer and VGI do hereby jointly and severally covenant and agree from time to
time and at all times hereafter to well and truly save, defend and keep harmless
and fully indemnify the Escrow Agent, its successors, and assigns, from and
against all loss, costs, charges, suits, demands, claims, damages and expenses
which the Escrow Agent, its successor or assigns, may at any time or times
hereafter bear, sustain, suffer or be put into for or by reason or on account of
its acting as Escrow Agent or anything in any manner relating thereto or by
reason of the Escrow Agent's compliance in good faith with the terms hereof.

12.            It is further agreed by and between the parties hereto, and
without restricting the generality of the foregoing indemnity, that in case
proceedings should hereafter be taken in any Court respecting the Shares, the
Escrow Agent shall not be obliged to defend any such action or submit its rights
to the Court until it shall have been indemnified by other good and sufficient
security in addition to other indemnity hereinbefore given against its costs of
such proceedings.

13.             Wherever the singular or masculine are used throughout this
agreement, the same shall be construed as being the plural or feminine or neuter
where the context so requires.

14.             This Agreement shall enure to the benefit of and be binding upon
the parties hereto, their and each of their heirs, executors, administrators,
successors, and permitted assigns.


<PAGE>
                                     - 5 -


      IN WITNESS OF WHICH the Parties have duly executed this Agreement.

                                        GOLDMAN, SPRING, SCHWARTZ & KICHLER

                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                        VISIBLE GENETICS INC.

                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                        VISIBLE GENETICS CORPORATION
                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:


SIGNED, SEALED & DELIVERED
In the presence of:


-------------------------------------        -----------------------------------
              Witness                                   Richard Daly


<PAGE>

                                                                      SCHEDULE B

                  THIS INDEMNIFICATION AGREEMENT is made [DATE]

                                      WITH

                                  RICHARD DALY



THIS AGREEMENT, made and entered into as of April lst, 1999 ("Agreement") by and
between VISIBLE GENETICS INC., a corporation formed under the laws of the
Province of Ontario (the "Company") and RICHARD DALY ("Indemnitee").

RECITALS:

A.    The  Company is aware  that  competent  and  experienced  persons  are
      increasingly   reluctant   to  serve  as   directors  or  officers  of
      corporations  unless they are  protected  by  comprehensive  liability
      insurance  and/or   indemnification   due  to  increased  exposure  to
      litigation  costs and  risks  resulting  from  their  service  to such
      corporations  and due to the fact that the exposure  frequently  bears
      no reasonable  relationship to the  compensation of such directors and
      officers;

B.    Based  upon  their  experience  as  business  managers,  the  Board of
      Directors of the Company (the "Board") has  concluded  that, to retain
      and  attract   talented  and  experienced   individuals  to  serve  as
      officers  and  directors  of  the  Company,   and  to  encourage  such
      individuals  to take the business  risks  necessary for the success of
      the  Company,  it  is  necessary  for  the  Company  to  contractually
      indemnify  officers and director,  and to assume for itself  liability
      for  expenses  and  damages in  connection  with claims  against  such
      officers  and  directors  in  connection  with  their  service  to the
      Company;

C.    Section  136 of the  BUSINESS  CORPORATIONS  ACT  of the  Province  of
      Ontario  under  which  the  Company  is  organized   ("Section   136")
      empowers  the  Company  to  indemnify  by  agreement   its   officers,
      directors,  employees  and  agents,  and  persons  who  serve  at  the
      request' of the Company, as directors,  officers,  employees or agents
      of  other  corporations  or  enterprises;  in  addition,  Section  136
      expressly  provides that the  indemnification  provided by Section 136
      is not exclusive; and

D.    The Company desires and has requested the Indemnitee to serve or continue
      to serve as a director or officer of the Company free from undue concern
      of claims for damages arising out of or related to such services to the
      Company.

      THEREFORE, the parties agree as follows:

                                   ARTICLE 1
                             SERVICES BY INDEMNITEE

Indemnitee agrees to continue to serve as a director or officer of the Company,
subject to any agreement which may exist between the Company or any of its
subsidiaries and Indemnitee. Indemnitee may at any time and for any reason
resign from such position (subject to any other agreement or contractual
obligation or any obligation imposed by operation of law) 1?? in which


<PAGE>
                                      - 2 -


event the Company shall have no obligation under this Agreement to continue
Indemnitee in any such position.

                                    ARTICLE 2
                            INDEMNIFICATION - GENERAL

The Company shall indemnify Indemnitee against Expenses (as hereinafter
defined), judgments, penalties, fines and amounts paid in settlement as provided
in this Agreement and to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other Sections of this Agreement.

                                   ARTICLE 3
                    PROCEEDINGS OTHER THAN PROCEEDINGS BY OR
                           IN THE RIGHT OF THE COMPANY

Indemnitee shall be entitled to the rights of indemnification provided in this
Section 3 if, by reason of his Corporate Status (as hereinafter defined), he is,
or is threatened to be made, a party to any threatened, pending, or completed
Proceeding (as hereinafter defined), other than a Proceeding by or in the right
of the Company. Pursuant to this Section 3 Indemnitee shall be indemnified
against Expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
Proceeding or any claim issue or matter therein, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful.

                                   ARTICLE 4
                  PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY

Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favour. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Ontario Court (General Division)
1?? or the Court in which such proceeding shall have been brought or is pending,
shall determine.


<PAGE>
                                     - 3 -


                                   ARTICLE 5
                    INDEMNIFICATION FOR EXPENSES OF A WITNESS

Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status a witness in any Proceeding, he
shall be indemnified against all expenses actually and reasonably incurred by
him or on his behalf in connection therewith.

                                   ARTICLE 6
                             ADVANCEMENT OF EXPENSES

The Company shall advance all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses.

                                    ARTICLE 7
          PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION

To obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Board of Directors in writing
that Indemnitee has requested indemnification.

Upon written request by Indemnitee for indemnification pursuant to the first
sentence of Section 7(a) hereof, a determination, if required by applicable law,
with respect to Indemnitee's entitlement thereto shall be made in the specific
case: (i) if a Change in Control (as hereinafter defined) shall have occurred,
by Independent Counsel (as hereinafter defined) (unless Indemnitee shall request
that such determination be made by the Board of Directors or the stockholders,
in which case such determination shall be made by the person or persons or in
the manner provided for in clause (ii) or (iii) of this Section 7)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) by the stockholders of the Company; or (iii) as provided in
Section 8(b) of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after *' determination. Indemnitee shall cooperate with the person, persons
or entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or Information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs


<PAGE>
                                     - 4 -


or expenses (including attorneys' fees and disbursements) incurred by Indemnitee
in so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.

In the event the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 7) hereof, Independent Counsel shall
be selected as provided in this Section 7(c). If a Change of Control shall not
have occurred, Independent Counsel shall be selected by the Board of Directors,
and the Company shall give written notice to Indemnitee advising him of the
identity of Independent Counsel so selected. If a Change of Control shall have
occurred, Independent Counsel shall be selected by Indemnitee (unless Indemnitee
shall request that such selection be made by the Board of Directors, in which
event the preceding sentence shall apply), and Indemnitee shall give written
notice to the Company advising it of the identity of Independent Counsel so
selected. In either event, Indemnitee or the Company, as the case may be, may,
within seven (7) days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection. Such objection may be asserted only on the ground
that Independent Counsel so selected does not meet the requirements of
"Independent Counsel", as defined in Section 16 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, Independent Counsel so selected
may not serve as Independent Counsel unless and until a Court of competent
jurisdiction has determined that such objection is without merit. If, within
twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Ontario Court (General Division) or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person with respect to
whom an objection is so resolved 6r the person so appointed shall act as
Independent Counsel under Section 7) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 7) hereof, and the Company
shall pay all reasonable fees and expenses incident to the procedures of this
Section 7(c), regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 9(a)(iii) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).

                                    ARTICLE 8
                 PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS

If a Change of Control shall have occurred, in making a determination with
respect to entitlement to indemnification hereunder, the person or persons or
entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request
for indemnification in accordance with Section 7(a) of this Agreement, and
the Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any
determination contrary to that presumption.

<PAGE>
                                     - 5 -


If the person, persons or entity empowered or selected under Section 8 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within 60 days after receipt by the Company of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification, under applicable law; provided,
however, that such sixty (60)-day period may be extended for a reasonable time,
not to exceed an additional thirty (30) days, if the person, persons or entity
making the determination with respect to entitlement to indemnification in good
faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto) and provided further, that
the foregoing provisions of this Section 8) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 7) of this Agreement and if (A) within fifteen
(15) days after receipt by the Company of the request for such determination the
Board of Directors has resolved to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within
seventy-five (75) days after such receipt and such determination is made there
at, or (B) a special meeting of stockholders is called within fifteen (15) days
after such receipt for the purpose of making such determination, such meeting is
held within sixty (60) days after having been so-called and such determination
is made there at, or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 7) of this Agreement.

The termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful.

                                    ARTICLE 9
                             REMEDIES OF INDEMNITEE

 In the event that (i) a determination is made pursuant to Section 7 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 7) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to Section 5 of this
Agreement within ten (10) days after receipt by the Company of a written request
therefore, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Sections 7 or B of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the Province of Ontario, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
Advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator


<PAGE>
                                     - 6 -


pursuant to the provisions of the Arbitrations Act (Ontario). Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within one hundred and eighty (180) days following the date on which Indemnitee
first has the right to commence such proceeding pursuant to this Section 9(a).
The Company shall not oppose Indemnitee's right to seek adjudication or award in
arbitration.

In the event that a determination shall have been made pursuant to Section 7 of
this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 9 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If a
Change of Control shall have occurred, in any judicial proceeding or arbitration
commenced pursuant to this Section 9 the Company shall have the burden of
proving that Indemnitee in not entitled to indemnification or advancement of
Expenses, as the case may be.

If a determination shall have been made or deemed to have been made pursuant to
Section 7 or 8 of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 9, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law.

The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 9 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.

In the event that Indemnitee, pursuant to this Section 91 seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all expenses (of the types described in the definition of Expenses in
Section 16 of this Agreement) actually and reasonably incurred by him in such
judicial adjudication or arbitration, but only if he prevails therein. If it
shall be determined in such judicial adjudication or arbitration that Indemnitee
is entitled to receive part but not all of the indemnification or advancement of
Expenses sought, the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be appropriately prorated.

                                   ARTICLE 10
           NON-EXCLUSIVITY: SURVIVAL OF RIGHTS: INSURANCE: SUBROGATION

The rights of indemnification and to receive advancement of Expenses as provided
by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Amended and
Restated Articles of Incorporation, the Amended and Restated By-laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or termination of this Agreement or any provision hereof
shall be effective as to any Indemnitee with respect to any action taken or
omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or termination.


<PAGE>
                                     - 7 -


To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, agents or
fiduciaries of the Company or of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,;
officer, employee or agent under such policy or policies.

In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.

The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

                                   ARTICLE 11
                              DURATION OF AGREEMENT

This Agreement shall continue until and terminate upon the later of: (a) ten
(10) years after the date that Indemnitee shall have ceased to serve as director
or officer, or (b) the final termination of all pending Proceedings in respect
of which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 9 of this Agreement relating thereto. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and his heirs, executors and administrators.

                                   ARTICLE 12
                                  SEVERABILITY

If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a)the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and ) to the fullest extent possible, the provisions of this Agreement
(including without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.

                                   ARTICLE 13
                    EXCEPTION TO RIGHT OF INDEMNIFICATION OR
                             ADVANCEMENT OF EXPENSES

Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding or any claim therein brought or made by him against
the Company.


<PAGE>
                                     - 8 -


                                   ARTICLE 14
                             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 one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.

                                   ARTICLE 15
                                    HEADINGS

The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof.

                                   ARTICLE 16
                                   DEFINITIONS

For purposes of this Agreement:

      "CHANGE IN CONTROL" means a change in control of the Company occurring
      after the Effective Date of a nature that would be required to be reported
      in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response
      to any similar item on any similar schedule or form) promulgated under the
      UNITED STATE SECURITIES EXCHANGE ACT of 1934 (the "Act") whether or not
      the Company is then subject to such reporting requirement; provided,
      however, that, without limitation, such a Change in Control shall be
      deemed to have occurred if after the Effective Date (i) any "person" (as
      such term is used in Section 33(d) and 14(d) of the Act) is or becomes the
      "beneficial owner" (as defined in Rule 13d-3 under the Act) directly or
      indirectly, of securities of the Company representing 25% or more of the
      combined voting power of the Company's then outstanding securities without
      the prior approval of at least two-thirds of the members of the Board of
      Directors in office immediately prior to such person attaining such
      percentage interest; (ii) the Company is a party to a merger,
      consolidation, sale of assets or other reorganization or a proxy contest,
      as a consequence of which members of the Board of Directors in office
      immediately prior to such transaction or eye constitute less than a
      majority of the Board of Director thereafter; or (iii) during any period
      of two consecutive years, individuals who at `he beginning of much period
      constituted the Board of Directors including for this purpose any new
      director whose election or nomination for election by the Company's
      stockholders was approved by a vote of at least two-thirds of the
      directors then still in office who were directors at the beginning of such
      period) cease for any reason to constitute at least a majority of the
      Board of Directors.

      "CORPORATE STATUS" describes the status of a person who is or was a
      director, officer, employee, agent or, fiduciary of the Company, or of any
      other corporation, partnership, limited liability company, joint venture,
      trust, employee benefit plan or other enterprise which such person is or
      was serving at the request of the Company.

      "DISINTERESTED DIRECTOR" means a director of the Company who is not and
      was not a party to the Proceeding in respect; of which indemnification is
      sought by Indemnitee.


<PAGE>
                                     - 9 -


      "EFFECTIVE DATE" means April 1, l999.

      "EXPENSES" shall include all reasonable attorney:' fees, retainers, court
      costs, transcript costs, fees of experts, witness fees, travel expenses,
      duplicating costs, printing, and binding costs, telephone charges,
      postage, delivery service fees, and all other disbursements or expenses of
      the types customarily incurred in connection with prosecuting, defending,
      preparing to prosecute or defend, investigating, or being or preparing to
      be a witness in a Proceeding.

      "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm, that is
      experienced in matters of corporation law and neither presently is, nor in
      the past five years has been retained to represent: (i) the Company or
      Indemnitee in any matter material to either such party, or (ii) any other
      party to the proceeding giving rise to a claim for indemnification
      hereunder. Notwithstanding the foregoing, `he term `Independent Counsel'
      shall not include any Person who, under the applicable standards of
      professional conduct then prevailing would have a conflict of interest in
      representing either the Company or Indemnitee in an action to determine
      Indemnitee's rights under this Agreement.

       "PROCEEDING" includes any action, suit, arbitration, alternate dispute
      resolution mechanism, investigation, administrative hearing or any other
      proceeding whether civil, criminal, administrative or investigative,
      except one initiated by Indemnitee pursuant to Section 9 of this Agreement
      to enforce his rights under this Agreement.

                                   ARTICLE 17
                             MODIFICATION AND WAIVER

No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

                                   ARTICLE 18
                              NOTICE BY INDEMNITEE

Indemnitee agrees promptly to notify the Company in writing upon being served
with any summons, citation, subpoena, complaint, indictment, information or
other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.

                                   ARTICLE 19
                                     NOTICES

All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered by hand and
receipted for by the party to whom said notice or other communication shall have
been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:


<PAGE>
                                     - 10 -


      (a)   If to Indemnitee, to:

            his address indicated on the signature page hereof

      (b)   If to the Company to:

                  Visible Genetics Inc.
                  700 Bay Street
                  Suite 1000
                  Toronto, Ontario
                  Canada MSG 1

or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.

                                   ARTICLE 20
                                  GOVERNING LAW

The parties agree that this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Province of Ontario.

                                   ARTICLE 21
                                  MISCELLANEOUS

Use of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate.

            IN WITNESS OF WHICH the Parties have duly executed this Agreement.



                                         VISIBLE GENETICS INC.


                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:


SIGNED, SEALED & DELIVERED
In the presence of:


-------------------------------------        -----------------------------------
              Witness                                   Richard Daly