<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from ________ to _________
COMMISSION FILE NUMBER 1-14004
XENOMETRIX, INC.
DELAWARE 04-3166089
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
2425 NORTH 55TH STREET
BOULDER, CO 80301
(303) 447-1773
Check whether issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
COMMON STOCK, $0.001 PAR VALUE 2,948,135 COMMON SHARES
(Class) OUTSTANDING AT JANUARY 31, 1998
Transitional Small Business Disclosure Format Yes No X
--- ---
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XENOMETRIX, INC
FORM 10-QSB
FOR THE PERIOD ENDED DECEMBER 31, 1997
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - December 31, 1997................................................................Page 3
Statement of Operations - Periods ended December 31, 1997 and 1996...............................Page 4
Statement of Cash Flows - Periods ended December 31, 1997 and 1996...............................Page 5
Notes to Financial Statements....................................................................Page 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.........................................................................Page 8
PART II - OTHER INFORMATION
Item 2. Changes in Securities............................................................................Page 13
Item 6. Exhibits and Reports on Form 8-K.................................................................Page 14
Signatures................................................................................................Page 15
</TABLE>
<PAGE> 3
Part One--Financial Information
XENOMETRIX, INC.
Balance Sheet
December 31, 1997
(Unaudited)
Assets
<TABLE>
<S> <C>
Current Assets:
Cash and cash equivalents $ 69,000
Accounts receivable, net 160,000
Inventory 85,000
Deposits and prepaid expense 208,000
------------
Total current assets 522,000
Property and equipment, net 756,000
Patents, net 315,000
------------
Total assets $ 1,593,000
============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 389,000
Accrued liabilities 394,000
Senior promissory notes, net of discount 1,096,000
------------
Total current liabilities 1,879,000
------------
Stockholders' Equity:
Preferred stock--$.001 par value; 5,000,000 shares authorized;
no shares issued and outstanding --
Common stock--$.001 par value; 20,000,000 shares authorized;
2,948,135 shares issued and outstanding 3,000
Additional paid-in capital 15,927,000
Accumulated deficit (16,216,000)
------------
Total stockholders' equity (286,000)
------------
Total liabilities and stockholders' equity $ 1,593,000
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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XENOMETRIX, INC.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and services $ 195,000 $ 214,000 $ 394,000 $ 380,000
Cost of sales and services 159,000 184,000 304,000 348,000
----------- ----------- ----------- -----------
Gross profit 36,000 30,000 90,000 32,000
----------- ----------- ----------- -----------
Research and development 339,000 339,000 712,000 589,000
Selling, general and administrative 519,000 654,000 984,000 1,211,000
----------- ----------- ----------- -----------
Total operating expense 858,000 993,000 1,696,000 1,800,000
----------- ----------- ----------- -----------
Operating loss (822,000) (963,000) (1,606,000) (1,768,000)
Other income (expense):
Grant income -- 27,000 -- 59,000
Interest income (expense), net (167,000) 31,000 (277,000) 71,000
Gain on early termination of lease -- -- -- 1,028,000
----------- ----------- ----------- -----------
Net loss $ (989,000) $ (905,000) $(1,883,000) $ (610,000)
=========== =========== =========== ===========
Net loss per common share:
Basic $ (0.34) $ (0.31) $ (0.64) $ (0.21)
=========== =========== =========== ===========
Weighted average common shares outstanding 2,948,000 2,930,000 2,948,000 2,923,000
=========== =========== =========== ===========
Diluted $ (0.34) $ (0.31) $ (0.64) $ (0.21)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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XENOMETRIX, INC.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (1,883,000) $ (610,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 176,000 148,000
Amortization of discount on senior promissory notes 203,000 --
Changes in assets and liabilities:
Accounts receivable 63,000 (138,000)
Receivable from termination of operating lease 115,000 (223,000)
Inventory 16,000 (11,000)
Deposits and prepaid expense 3,000 59,000
Accounts payable and accrued liabilities 72,000 268,000
------------ ------------
Net cash used in operating activities (1,235,000) (507,000)
------------ ------------
Cash Flows from Investing Activities:
Capital expenditures (10,000) (732,000)
Patent acquisition cost (39,000) (46,000)
------------ ------------
Net cash used in investing activities (49,000) (778,000)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from issuance senior promissory notes and warrants 750,000 --
Proceeds from issuance of common stock -- 97,000
------------ ------------
Net cash provided by financing activities 750,000 97,000
------------ ------------
Net decrease in cash (534,000) (1,188,000)
Cash and cash equivalents at beginning of period 603,000 3,290,000
------------ ------------
Cash and cash equivalents at end of period $ 69,000 $ 2,102,000
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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XENOMETRIX, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDING DECEMBER 31, 1997
(Unaudited)
1. Basis of Presentation
The accompanying financial statements are unaudited. However, in the opinion of
management, the accompanying financial statements reflect all adjustments,
consisting of only normal recurring adjustments, necessary for fair
presentation. Interim results of operations are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the Xenometrix Annual Report on Form 10-KSB for the year ended
June 30, 1997.
Except for the historical information contained in this Form 10-QSB, this Form
contains forward-looking statements that involve risks and uncertainties.
Xenometrix's actual results could differ materially from those discussed in
this Report. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this Report and any
documents incorporated herein by reference, as well as in the Xenometrix Annual
Report on Form 10-KSB for the year ended June 30, 1997.
2. Termination of Operating Lease
In connection with its move to a new facility in October 1996, Xenometrix
entered into a lease termination agreement with its previous landlord and
entered into an agreement with another company which paid Xenometrix $700,000
upon termination of its prior lease, $18,000 for reimbursement of a portion of
its actual moving expenses, and additional consideration of $360,000 payable in
six quarterly installments beginning September 30, 1996 and continuing through
December 31, 1997. The present value of the total consideration due under this
agreement ($1,028,000) is shown as a gain on the early termination of a lease
in the statement of operations for the six months ended December 31, 1996. The
remaining quarterly payments of $120,000 at June 30, 1997, net of unamortized
discount, were collected in the quarter ended September 30, 1997.
3. Senior Secured Debt
In the quarter ended December 31, 1997 and in the month of January 1998,
Xenometrix issued Senior promissory notes in the amounts of $750,000 and
$250,000, respectively, to serve as additional bridge financing. The notes bear
interest at 12% per annum and mature on the earlier of March 25, 1998, or the
completion of a sale of public or private equity securities resulting in net
proceeds to the Company of at least $3 million. In connection with the issuance
of these notes, Xenometrix issued warrants to purchase 333,330 shares of common
stock, at an exercise price equal to the lower of a) $2.15 or b) the price per
share in the Company's next placement of equity securities resulting in net
proceeds to the Company of at least $3 million. The Company may, at its option,
either repay the notes when due, or convert the principal
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amount plus any accrued interest, into shares of the Company's securities at a
price per share equal to the offering price in the Company's next sale of
equity securities resulting in net proceeds to the Company of at least $3
million. In the event of default by the Company on the notes, the interest rate
will increase to 18% per annum and the note holders will have the right to
appoint a majority of the Board of Directors of the Company.
4. Earnings (Loss) Per Common Share
Effective for the quarter and six month period ended December 31, 1997, the
loss per common share is computed using the Financial Accounting Standards
Board's recently issued Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings Per Share" (EPS). SFAS No. 128 establishes new standards for
computing and presenting EPS and supercedes all prior EPS guidance found in APB
Opinion 15.
Basic loss per common share is computed by dividing net loss by the
weighted-average number of common shares outstanding during the period.
Diluted loss per common share is computed using the treasury stock method based
upon the weighted-average number of common shares, dilutive common stock
equivalent shares and the assumed conversion of any dilutive convertible
securities outstanding during the period. Because the inclusion of these common
stock equivalents and convertible securities would be anti-dilutive, i.e.
reduce the reported loss per share, they are excluded from the Company's
calculation of diluted loss per share.
5. Subsequent Events
On January 12, 1998, Xenometrix was notified of a decision by the National
Association of Securities Dealers to delist the Company's securities from The
Nasdaq Stock Market, effective at the close of business on that date. This
action was taken because the Company's assets, capital and surplus had fallen
below the minimum required to maintain inclusion on the Nasdaq SmallCap Market.
On February 3, 1998, the Company announced a restructuring of its operations
resulting in the elimination of twenty positions--approximately two-thirds of
its workforce. This action was taken to conserve resources while the Company
pursues options for raising additional capital and evaluates other strategic
options.
7
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ITEM 2. XENOMETRIX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of operations and financial condition
should be read in conjunction with the financial statements and notes thereto.
See Item 1. Except for the historical information contained in this Form
10-QSB, this report contains forward-looking statements that involve risks and
uncertainties. Xenometrix' actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this Report and
any documents incorporated herein by reference, as well as in the Xenometrix
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997.
OVERVIEW
As of February 12, 1998 the Company had cash and cash equivalents of
approximately $40,000. The Company estimates that its current resources will be
sufficient to meet its operating needs through approximately February 28, 1998.
In the event additional financing cannot be secured, the Company will evaluate
other options including, but not limited to, significantly curtailing or
suspending its operations. (See Liquidity and Capital Resources).
Since inception, the Company's efforts have been focused upon
commercializing its technology in the field of molecular toxicology.
Accordingly, the Company's resources were directed primarily at the drug safety
and toxicology markets. In the first half of calendar 1997, the Company put
considerable effort into evaluating the changes that are occurring in
pharmaceutical research and development. The Company concluded that its
proprietary gene activation profiles provide valuable information that may be
used to help pharmaceutical researchers optimize drug leads. The Company
believes its technology can help pharmaceutical companies evaluate and optimize
the growing number of drug leads emerging from genetic sequencing,
combinatorial chemistry and high throughput screening. While the Company will
continue to serve the drug safety and toxicology market, it plans to focus a
significant portion of its effort and resources developing and marketing its
products and services to pharmaceutical companies for testing, evaluation and
optimization of their lead compounds.
The Company believes that its focus on this market will enable it to
expand its business through collaborative arrangements with potential customers
and business partners. In this regard, in April 1997, the Company centralized
its sales and support operations in Boulder, eliminated field sales positions
and created an expanded business development function. The restructuring of
these functions has conserved resources, which the Company is re-
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deploying to adapt and develop the Company's products and services to better
serve the drug discovery and development market. These resources are primarily
being used to strengthen its research and product development efforts, such as
continued discovery and/or licensing of new genes, and building the Company's
growing bioinformatics database.
The timing and amount of revenues from sales of products and services to
the drug discovery and development market as well as to the toxicology and
product safety market cannot be predicted with certainty. Similarly, the
Company's ability to enter into meaningful collaborative agreements with
customers or other potential collaborators and licensees cannot be predicted
with a high degree of accuracy. Accordingly, results of operations for any
period may be unrelated to results of operations for any other period and are
likely to fluctuate sharply. In addition, historical results should not be
viewed as indicative of future operating results.
RESULTS OF OPERATIONS
COMPARISON OF QUARTERS ENDED DECEMBER 31, 1997 AND 1996
Net sales and services. Net sales and services for the quarter ended December
31, 1997, decreased 9% to $195,000 from $214,000 in the prior year. This
decrease was primarily attributable to lower sales of the Company's client
research laboratory services.
Gross Profit. For the quarter ended December 31, 1997, gross profit increased
to $36,000 from $30,000 reported in the prior year. This increase was
attributable to a shift in the Company's product mix, with a greater proportion
of total revenue coming from sales of assay kits, which generally have higher
profit margins than revenue derived from client research laboratory services.
Research and Development Expenses. Research and development expenses were
$339,000 for the quarter ended December 31, 1997, the same as in the comparable
quarter in 1996.
Selling, General and Administrative Expenses (SG&A). Selling, general and
administrative expense decreased 21% to $519,000 from $654,000 reported in the
1996 quarter. This decrease was primarily attributable to cost savings
resulting from the elimination of the field sales and marketing operations in
the quarter ended June 30, 1997, partially offset by increased costs associated
with an expanded business development function.
Other Income and Expense. Xenometrix earned $27,000 of grant income in the
quarter ended December 31, 1996 from a National Institutes of Health grant.
There were no such grants in the comparable 1997 quarter.
In the quarter ended December 31, 1997, the Company incurred net interest
expense of $167,000. From June through December 1997, Xenometrix issued Senior
promissory notes in the amount of $1,250,000 to serve as bridge financing. The
notes bear interest at 12% and were accompanied by the issuance of warrants to
purchase 416,662 shares of common stock. The interest accruing on these notes,
together with the amortization of the note discount asso-
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ciated with the issuance of the warrants, resulted in a charge to interest
expense of $168,000 during the quarter ended December 31, 1997. This interest
expense was partially offset by interest income of $1,000 during the quarter.
In the comparable quarter of the prior year, Xenometrix earned $31,000 interest
income on the short-term investment of the remaining proceeds from its October
1995 initial public offering.
COMPARISON OF THE SIX MONTH PERIODS ENDED DECEMBER 31, 1997 AND 1996
Net sales and services. Net sales and service revenue for the six month period
ended December 31, 1997 were $394,000, a 4% increase from the comparable period
in the prior year. This increase was primarily attributable to higher sales of
the Company's gene profile assay kits, partially offset by lower sales of the
Company's client research laboratory services.
Gross profit. Gross profit for the six months ended December 31, 1997 increased
to $90,000 from $32,000 in the comparable period in 1996. This increase was
primarily attributable to two factors. First, the product mix in the 1997
period included a larger proportion of revenue from the sale of assay kits,
which generally have higher profit margins than revenue derived from services.
Second, during the 1996 period, the Company performed a large commercial
validation project for a European multi-national chemical manufacturer at a
substantial discount to normal pricing levels. This resulted in high
manufacturing costs and an abnormally low gross profit margin in the prior
period.
Research and development (R&D). Research and development expense for the six
months ended December 31, 1997 was $712,000, a 21% increase over the $589,000
reported in the comparable period of the prior year. In the current period, R&D
efforts were focused on research, product development and building the
Company's bioinformatics database. In the prior period, R&D personnel assisted
with the validation project. Accordingly, a portion of the department costs
were charged to cost of sales and services in that period.
Selling, general and administrative expenses (SG&A). For the six month period
ended December 31, 1997, SG&A expenses were $984,000, down 19% from the
$1,211,000 reported in the comparable 1996 period. This decrease was primarily
attributable to cost savings resulting from the elimination of the field sales
and marketing operations, partially offset by increased costs associated with
an expanded business development function.
Other Income and Expense. Xenometrix earned $59,000 of grant income in the six
month period ended December 31, 1996 from a National Institutes of Health
grant. There were no such grants in the comparable 1997 period.
In the six months ended December 31, 1997, the Company incurred net interest
expense of $277,000. The interest accruing on the Senior promissory notes,
discussed above, together with the amortization of the note discount associated
with the issuance of the warrants, resulted in a charge to interest expense of
$284,000 during this period. This interest expense was partially offset by
interest income of $7,000 during the period. In the comparable six
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month period of the prior year, Xenometrix earned $71,000 interest income on
the short-term investment of the remaining proceeds from its October 1995
initial public offering.
In the six months ended December 31, 1996, the Company entered into an
agreement whereby it received certain consideration for relinquishing its
former operating lease. The Company recognized a one-time gain of $1,028,000
resulting from this transaction. (See Note 2)
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company's cash and cash equivalents were $69,000,
compared to $603,000 at June 30, 1997. During the six month period ended
December 31, 1997, $1,235,000 was used to fund Xenometrix' operations, $49,000
was invested in equipment and patents, and the Company received $750,000 from
the issuance of senior notes and warrants under a bridge financing line of
credit, described below.
In September 1997, the Company obtained a commitment for a $1,500,000
short-term bridge financing line of credit, consisting of a private placement
of 12% promissory notes coupled with common stock warrants. As of December 31,
1997, $1,250,000 of this commitment was drawn down and the Company issued
warrants to purchase 416,662 shares of common stock. In January 1998, the
remaining $250,000 was drawn down against the commitment and warrants to
purchase an additional 83,333 shares of common stock were issued. The notes
mature on the earlier of March 25, 1998, or the completion of a sale of public
or private equity securities resulting in net proceeds to the Company of at
least $3 million. The Company may, at its option, either repay the notes when
due, or convert the principal amount plus any accrued interest, into shares of
the Company's securities at the offering price in the Company's next Offering.
In the event of default by the Company on the notes, the interest rate will
increase to 18% per annum and the note holders will have the right to appoint a
majority of the Board of Directors of the Company.
On January 12, 1998, Xenometrix was notified of a decision by the National
Association of Securities Dealers to delist the Company's securities from The
Nasdaq Stock Market, effective at the close of business on that date. This
action was taken because the Company's assets, capital and surplus had fallen
below the minimum required to maintain inclusion on the Nasdaq SmallCap Market.
As of February 12, 1998 the Company had cash and cash equivalents of
approximately $40,000. The Company estimates that its current resources will be
sufficient to meet its operating needs through approximately February 28, 1998.
As of February 12, 1998, the Company had not finalized any arrangements for
raising additional capital. In the event additional financing cannot be
secured, the Company will evaluate other options including, but not limited to,
significantly curtailing or suspending its operations.
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On February 3, 1998, the Company announced a restructuring of its operations
resulting in the elimination of twenty positions--approximately two-thirds of
its workforce. This action was taken to conserve resources while the Company
pursues options for raising additional capital and evaluates other strategic
options.
12
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PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In September 1997, Xenometrix entered into a Senior Line of Credit Agreement
(the "Credit Agreement") with the Aries Domestic Fund L.P. and the Aries Fund, a
Cayman Islands Trust, for a $1,500,000 line of credit, consisting of a private
placement of notes coupled with common stock warrants. The notes bear interest
at 12% per annum and mature on the earlier of March 25, 1998, or the completion
of a sale of public or private equity securities resulting in net proceeds to
the Company of at least $3 million (the "Offering"). The original Credit
Agreement provided that the Company could, at its option, either repay the notes
when due, or convert the principal amount plus any accrued interest, into shares
of the Company's securities at a price per share equal to 70% of the offering
price in the Company's next Offering. In December 1997, the Credit Agreement was
amended to adjust the conversion price at which the notes could be converted
into shares of the Company's securities to a price per share equal to 100% of
the offering price in the Company's next Offering. This amendment applied to
both existing loans and future loans under the Credit Agreement. In the event of
default by the Company on the notes, the interest rate will increase to 18% per
annum and the note holders will have the right to appoint a majority of the
Board of Directors of the Company. For each $100,000 loan made under the
Agreement, the Company will issue 33,333 warrants to purchase shares of common
stock, at an exercise price equal to the lower of a) $2.15 or b) the price per
share in the Company's next Offering.
Pursuant to a subscription agreement dated June 23, 1997, the terms and
conditions of the Credit Agreement were applicable to the $500,000 loan
previously made to the Company on June 23, 1997 as well as future loans made
under the line of credit. Through December 31, 1997, Xenometrix has issued
notes and warrants under the Credit Agreement as follows:
<TABLE>
<CAPTION>
Loan Date Notes Warrants
--------- ----- --------
<S> <C> <C>
6/23/97 $500,000 166,665
10/21/97 250,000 83,333
10/30/97 250,000 83,332
12/15/97 250,000 83,332
</TABLE>
The Company did not use an underwriter for the sale of these securities. The
sales and issuances of securities in the transaction described above, were
deemed to be exempt from registration under the Securities Act of 1933, (the
"Securities Act") as amended, by virtue of Section 4 (2) and or Regulations
promulgated under the Securities Act.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.30 First Amendment dated December 18, 1997 to the Senior Line
of Credit Agreement, dated September 25, 1997 between Aries
Domestic Fund, L.P., The Aries Fund, a Cayman Islands Trust
and the Registrant
10.31 Employment Agreement, dated December 9, 1997 between the
Company and Paul J. Koivuniemi
10.32 Amendment dated January 16, 1998 to the Employment
Agreement dated October 5, 1995, between the Company and
Ronald L. Hendrick
10.33 Amendment dated January 16, 1998 to the Employment
Agreement dated October 5, 1995, between the Company and
Pauline Gee
10.34 Amendment dated January 16, 1998 to the Employment
Agreement dated September 19, 1997, between the Company and
Mark B. Benjamin
10.35 Amendment dated January 16, 1998 to the Employment
Agreement dated December 9, 1997, between the Company and
Paul J. Koivuniemi
27.1 Summary Financial Information Schedule
(b) Reports on Form 8-K
No Form 8-K reports were filed during the period covered by this
report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf.
XENOMETRIX, INC.
/s/ Stephen J. Sullivan
February 17, 1998 Stephen J. Sullivan
President, Chief Executive Officer
And Director
/s/ Ronald L. Hendrick
February 17, 1998 Ronald L. Hendrick
Executive Vice President and Chief Financial
Officer Principal Accounting and Financial
Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.30 First Amendment dated December 18, 1997 to the Senior Line
of Credit Agreement, dated September 25, 1997 between Aries
Domestic Fund, L.P., The Aries Fund, a Cayman Islands Trust
and the Registrant
10.31 Employment Agreement, dated December 9, 1997 between the
Company and Paul J. Koivuniemi
10.32 Amendment dated January 16, 1998 to the Employment
Agreement dated October 5, 1995, between the Company and
Ronald L. Hendrick
10.33 Amendment dated January 16, 1998 to the Employment
Agreement dated October 5, 1995, between the Company and
Pauline Gee
10.34 Amendment dated January 16, 1998 to the Employment
Agreement dated September 19, 1997, between the Company and
Mark B. Benjamin
10.35 Amendment dated January 16, 1998 to the Employment
Agreement dated December 9, 1997, between the Company and
Paul J. Koivuniemi
27.1 Summary Financial Information Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.30
FIRST AMENDMENT TO THE
SENIOR LINE OF CREDIT AGREEMENT
This first amendment (the "Amendment") to the Senior Line of Credit
Agreement and related documents is dated as of December 18, 1997 and amends the
Senior Line of Credit Agreement dated as of September 25, 1997 (the "Agreement")
by and among the Aries Domestic Fund, L.P., the Aries Fund, a Cayman Islands
Trust (together the "Funds") and Xenometrix, Inc., (the "Company") and related
documents as set forth herein. Terms not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
WHEREAS, the Company and Funds executed the Agreement
contemplating a private placement of the Company's securities;
WHEREAS, the Company has retained Barington Capital Group, L.P.
to act as a placement agent of shares of the Company's Series C Preferred Stock
(the "Financing");
WHEREAS, the Funds have agreed to convert the principal and accrued
interest of the notes issued to them pursuant to the Agreement prior to the
closing of the Financing (the "Notes") into shares of the Company's Series C
Preferred Stock on the same terms and conditions as other investors in the
Financing;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. The Funds will convert the Notes into shares of the Company's Series C
Preferred Stock concurrent with the first closing of the Financing (such date,
the "Initial Closing"). The Financing will have terms and conditions
substantially equivalent to those set forth in the documents attached hereto as
Exhibit A (the "Subscription Documents").
2. The Company agrees that after the Initial Closing, it will not draw down any
additional amounts pursuant to the Senior Line of Credit.
3. The Funds agree that if the Company has not drawn down the full $1,500,000
available under the Senior Line of Credit prior to the Initial Closing, the
Funds will purchase shares in the Final closing (as defined below) of Series C
Preferred Stock for aggregate consideration equal to the difference between (i)
$1,500,000 and (ii) the amount of the Line of Credit outstanding on the Initial
Closing Date. For purposes of this Section 3, the Final Closing shall be deemed
to occur when investors (other than the Funds) purchase shares of Series C
Preferred Stock with an aggregate purchase price of not less than $3,000,000.
<PAGE> 2
4. The parties hereto agree that the conversion set forth in Section 1 above
will satisfy the repayment provision set forth in Section 2 of the Agreement.
5. Simultaneously with the Initial Closing, the parties hereto agree that
Section 3 of each Note shall be amended at such time to provide that the
conversion contemplated in Section 1 hereof will result in the Funds receiving
shares of Series C Preferred Stock at a conversion rate equal to 100% of the
Offering Price of the Financing and not 70% as set forth in Section 3 of the
Notes.
6. This Amendment may be executed in any number of counterparts, each of which
shall be an original, but all of which together constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth above.
XENOMETRIX, INC. THE ARIES FUND, A CAYMAN ISLAND TRUST
By: By: Its Investment Manager, Paramount
----------------------------- Capital Asset Management, Inc.
By:
----------------------------
Its: President
THE ARIES DOMESTIC FUND, L.P.
By: Its General Partner, Paramount
Capital Asset Management, Inc.
By:
----------------------------
Its: President
<PAGE> 1
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 9, 1997, by and between XENOMETRIX,
INC. a Delaware corporation (the "Corporation"), and PAUL J. KOIVUNIEMI (the
"Employee").
WITNESSETH:
WHEREAS, the Corporation desires to employ the Employee and the Employee desires
to be employed by the Corporation as its Vice President of Legal Affairs and
Secretary of the Corporation, all pursuant to the terms and conditions
hereinafter set forth; and
WHEREAS, the Employee recognizes that the Corporation is at this point in its
development dependent upon his capabilities, that its products during its first
years of operation may be few in number and limited in scope, and that the
imposition of the restriction set forth below upon the Employee and other key
employees and advisors may be essential to the success of the Corporation and
the livelihood of the Employee's associates in the Corporation;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES.
a) The Corporation engages and employs the Employee, and the Employee
hereby accepts engagement and employment, as the Vice President of
Legal Affairs and Secretary of the Corporation. During the Employment
Period (as hereinafter defined), the Employee shall have
responsibility for legal affairs of the Corporation and performing
such other services and duties, consistent with the office of Vice
President of Legal Affairs and Secretary of the Corporation, as he may
from time to time be reasonably requested to perform by the President
and/or Board of Directors of the Corporation (the "Board"). In
performing his duties hereunder, the Employee shall report directly to
the President of the Corporation. If requested by the Corporation and
duly elected or appointed, the Employee will also serve as a director
of the Corporation without additional compensation.
b) The Employee shall be located within a reasonable distance from
Boulder, Colorado so as to be able to perform his duties hereunder
from the Corporation's executive offices which will be located in
Boulder, Colorado; provided, however, that the Employee acknowledges
and agrees that the performance by the Employee of this duties
hereunder may require significant domestic and international travel by
the Employee.
c) During the Employment Period, the Employee shall devote his full time
and best efforts to the business and affairs of the Corporation.
Notwithstanding the foregoing, the Employee shall be permitted to
serve on the board of directors of commercial and charitable
organization and to make investments which are not related to the
business and affairs of the Corporation for which he may receive
compensation, so long as such activities or investments do not
interfere with the performance of the Employee's duties and
obligations hereunder. Employee and the Board of Directors will
periodically review such outside commitments to insure that such
commitments do not interfere with the Employee's duties with the
Company.
<PAGE> 2
2. TERM.
The term of employment under this Agreement shall be for a period commencing on
December 9, 1997 and continuing through October 5, 1998. The term of employment
referred to in this Section 2, together with any extensions thereof shall be
referred to herein collectively as the "Employment Period".
3. COMPENSATION AND BENEFITS.
As compensation for the performance of his duties on behalf of the Corporation,
the Employee shall be compensated as follows:
a) During the period under this Agreement commencing on December 9, 1997
and ending on October 5, 1998, the Corporation shall pay or cause to
be paid to the Employee a base salary at an annual rate of $120,000,
payable in substantially equal installments in accordance with the
Corporation's usual practice. The Employee's annual salary for any
subsequent periods contemplated hereunder, shall be reviewed by the
Board of Directors not less often than annually and the Board of
Directors shall grant increases thereof based on the performance of
the Corporation and the Employee's relative contribution to that
performance. The annual base salary payable in any year pursuant to
this Agreement is hereinafter known as the "Annual Salary." Any
increase in Annual Salary or other compensation shall in no way limit
or reduce any other obligation of the Corporation hereunder. The
Corporation shall withhold all applicable federal, state and local
taxes, social security and workers' compensation contributions and
such other amounts as may be required by law or agreed upon by the
parties with respect to the compensation payable to the Employee
pursuant to this Section 3(a).
b) In addition to an Annual Salary, for the fiscal year ending June 30,
1998, the Employee shall be entitled to receive as incentive
compensation a cash bonus pursuant to a bonus plan, the terms and
payment of which shall be mutually agreed upon by the Board of
Directors and the Employee (the "Bonus Plan").
c) The corporation shall reimburse the Employee for all reasonable
expenses incurred by the Employee in furtherance of the business and
affairs of the Corporation, including reasonable travel and
entertainment, against receipt by the Corporation of appropriate
vouchers or other proof of the Employee's expenditures and otherwise
in accordance with such policies and procedures as may from to time be
adopted by the Company.
d) The Employee shall be entitled to the number of paid vacation days in
each calendar year determined by the Corporation from time to time for
its officers, but not less than two weeks in any calendar year. The
Employee shall also be entitled to all paid holidays given to the
Corporation's officers.
e) The Corporation shall make available to the Employee and his
dependents such retirement, life insurance, health insurance and
disability benefits as the Corporation makes available to its other
officers.
4. NON-COMPETITION.
a) The Employee understands and recognizes that his services to the
Corporation are special and unique and agrees that, during the term of
this Agreement and for a period of two (2) years from the date of
termination of his employment hereunder, he shall not in any manner,
<PAGE> 3
directly or indirectly, on behalf of himself or any person, firm,
partnership, joint venture, corporation or other business entity (a
"Person"), enter into or engage in any business competitive with the
Corporation's business, proposed business or research activities,
either as an individual for his own account, or as a partner, joint
venture, executive, agent, consultant, sales or marketing person,
officer, director of shareholder (other than passive investment of not
more than five percent (5%) of the outstanding shares of, or any other
equity interest in, any company or entity listed or traded on a
national securities exchange or an interest in a partnership for which
the Employee does not exercise control over investment decisions of
such partnership) of a Person operating or selling or intending to
operate or sell in the areas of business and within the product
markets listed in Schedule 1 attached hereto, within the geographic
area of the Corporation's business. Schedule I hereto shall be amended
from time to time upon agreement by the parties hereto to take into
account additional areas of business and product markets in which the
Corporation may become engaged.
b) During the term of this Agreement and for two (2) years thereafter,
the Employee shall not, directly or indirectly, without the prior
written consent of the corporation interfere with the business of the
Company by soliciting, attempting to solicit, inducing, or otherwise
causing any employee of the Company to terminate his or her employment
in order to become an employee, consultant or independent contractor
to or for any competitor of the Company.
c) In the event that the Employee breaches any provisions of this Section
4 or there is a threatened breach, then, in addition to any other
rights which the Corporation may have, the Corporation shall be
entitled, without the posting of a bond or other security, to
injunctive relief to enforce the restrictions contained herein. In the
event that an actual proceeding is brought in equity to enforce the
provisions of this Section 4, the Employee shall not urge as a defense
that there is an adequate remedy at law nor shall the Corporation be
prevented from seeking any other remedies which may be available.
5. TERMINATION.
a) DEATH OR RETIREMENT. The Employee's employment hereunder shall
terminate upon his death or retirement.
b) DISABILITY. If, as a result of the Employee's incapacity due to
physical or mental illness ("Disability"), the Employee shall have
been absent from his duties hereunder for ninety (90) consecutive
business days, and within thirty (30) days after written Notice of
Termination (as hereinafter defined) is given shall not have returned
to the performance of his duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder.
c) CAUSE. The Corporation may terminate the Employee's employment
hereunder for "Cause". For purposes of this Agreement, "Cause" shall
mean (i) the willful engaging by the Employee in gross misconduct
materially injurious to the Corporation, (ii) the willful and material
violation by the Employee of the provisions of Section 4 hereof or of
the Proprietary Agreement, or (iii) the willful and material violation
by the Employee of any provision of this Agreement, other than Section
4 hereof or of the Proprietary Agreement, which is not cured by the
Employee within fifteen (15) days after written notice thereof from
the Corporation. For purposes of this paragraph, no act, or failure to
act, on the Employee's part shall be considered "willful" unless done,
or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the
corporation. Notwithstanding the foregoing, the Employee shall not be
deemed to have been
<PAGE> 4
terminated for Cause unless and until there shall have been delivered
to the Employee a copy of a resolution, duly adopted by the Board of
Directors at a meeting of the Board of Directors called and held
(after five (5) days notice to the Employee of such meeting and an
opportunity for him, together with his counsel, to be heard before the
Board of Director at such meeting) for the purposes of finding that in
the good faith opinion of the Board of Directors, the Employee was
guilty of conduct set forth above in clauses (i), (ii) or (iii) of
this Section 5(c).
d) CHANGE OF DUTIES. Any assignment to the Employee of duties which are
inconsistent with the Employee's status as a Vice President of Legal
Affairs and Secretary of the Corporation or are a substantial
reduction in the nature or the status of the Employee's
responsibilities may be treated by him as a termination pursuant to
Section 5(f) hereof.
e) SALE OF ASSETS. In the event of the sale of all or substantially all
of the Corporation, or a sale of all or substantially all of the
assets of the Corporation, the Employee may treat his employment as
having been terminated pursuant to Section 5(f) herein.
f) OTHER TERMINATION BY THE CORPORATION. Notwithstanding the foregoing
provisions, the Corporation may terminate the Employee's employment
hereunder at any time, subject to the provisions of Section 6(d)
hereof.
g) VOLUNTARY TERMINATION BY THE EMPLOYEE. Notwithstanding the foregoing
provisions, the Employee may terminate his employment hereunder at any
time upon three month's written notice to the Corporation, subject to
the provisions of Section 6(c) hereof.
h) NOTICE OF TERMINATION. Any termination by the Corporation pursuant to
paragraphs (b), (c), or (d) above or by the Employee pursuant to
paragraph (e) above shall be communicated by a written Notice of
Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provisions in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision
so indicated.
i) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Employee's employment is terminated as a result of the Employee's
incapacity due to physical or mental illness, thirty (30) days after
Notice of Termination is duly given (provided that the Employee shall
not have returned to the performance of his duties on a full-time
basis during such thirty (30) day period), (ii) the date of the
Employee's death or retirement, or (iii) if the Employee terminates
his employment or his employment is terminated for any other reason,
the date on which a Notice of Termination is duly given.
6. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
a) If the Employee's employment shall be terminated due to death, the
Employee's estate or other legal representative shall be entitled to
receive any accrued but unpaid Annual Salary installments and any
accrued reimbursable expenses (to the extent provided in Section 3(c)
hereof). In addition, the Employee's estate shall be entitled to
receive a payment for (i) any accrued but unused vacation days and
(ii) a pro rata portion of any cash bonus due pursuant to Section 3(b)
hereof. In the event of Employee's death, rights and benefits of the
Employee under employee benefit and fringe benefit plans and programs
of the Corporation will be determined in accordance with the terms and
provision so such plans and programs.
b) During any period that the Employee fails to perform his duties
hereunder due to Disability, the Employee shall continue to receive
his full Annual Salary until the Employee's
<PAGE> 5
employment is terminated pursuant to Section 5(b) hereof. After
termination due to Disability, the Employee shall be paid disability
benefits in accordance with any long term disability plan of the
Corporation then in effect. In the event of the Employee's disability
as determined above, rights and benefits of the Employee under
employee benefit and fringe benefit plans and programs of the
corporation will be determined in accordance with the terms and
provisions of such plans and programs.
c) If the Employee's employment shall be terminated for Cause or if the
Employee shall terminate his employment pursuant to Section 5(g)
hereof, the Corporation shall pay the Employee any accrued but unpaid
Annual Salary installments and any accrued reimbursable expenses (to
the extent provided in Section 3(c) hereof) only through the Date of
Termination and the Corporation shall have no further obligations to
the Employee under this Agreement. Any rights and benefits the
Employee may have under employee benefit and fringe benefit plans and
programs of the corporation will be determined in accordance with the
terms of such plans and programs.
d) If the Employee's employment shall be terminated by the Corporation
pursuant to Section 5(d), (e) or (f) hereof then the corporation shall
continue to pay the Employee his regular salary through the date which
is six (6) months after the Date of Termination; provided, however,
that the Corporation's obligation to pay such salary shall terminate
at such time as the Employee commences any alternative full-time
employment. Notwithstanding the foregoing, the Corporation will only
be obligated to reimburse the Employee for reimbursable expenses ( to
the extent provided in Section (c) hereof) accrued through the Date of
Termination. The Employee shall also be entitled to receive a payment
for (i) any accrued but unused vacation days and (ii) a pro rata
portion of any cash bonus due pursuant to Section 3(b) hereof. If the
Employee's employment shall be terminated by the Corporation pursuant
to Section 5(d), (e) or (f) hereof, and if the Employee shall be
ineligible to participate in any of the Corporation's fringe benefit
plans or arrangements as a result of his ceasing to be an employee of
the Corporation, then the Corporation shall arrange to provide the
Employee with substantially equivalent benefits as if he remained
employed by the Corporation until the earlier of (i) six (6) months or
(ii) the end of the term of employment referred to in Section 2 hereof
at no additional expense to the Employee.
e) If the Employee's employment is terminated due to retirement, the
Employee shall be entitled to receive accrued but unpaid Annual Salary
installments and any accrued reimbursable expenses (to the extent
provided in Section 3(c) hereof).
7. NOTICES.
Any notice or other communication under this Agreement shall be in writing
and shall be deemed to have been given: (a) when delivered personally
against receipt therefore; (b) one day after being sent by Federal Express
or similar overnight delivery; or (c) three days after being mailed
registered or certified mail, postage prepaid, return receipt requested,
to the Employee at such address as the Employee shall provide to the
Corporation or to the Corporation at the following address:
Xenometrix, Inc.
2425 N. 55th Street
Boulder, Co 80301
Attn: Chief Executive Officer
<PAGE> 6
or to such other address or person as either party may have furnished to
the other in writing in accordance herewith.
8. RENEWAL OF AGREEMENT.
Upon expiration of the term of this Agreement, this Agreement may be
renewed for additional one (1) year periods by the mutual written
agreement of the parties hereto.
9. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being
enforced in whole or in part, such provision shall be interpreted so as to
remain enforceable to the maximum extent permissible consistent with
applicable law and the remaining conditions and provisions or portions
thereof shall nevertheless remain in full force and effect and enforceable
to the extent they are valid, legal and enforceable, and no provision
shall be deemed dependent upon any other covenant or provision unless so
expressed herein.
10. ENTIRE AGREEMENT; MODIFICATION.
This Agreement contains the entire agreement of the parties relating to
the subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto. This Agreement supersedes any previous terms of employment between
the Corporation and Employee and any previous employment contractual terms
are terminated as of the date hereof.
11. BINDING EFFECT.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Corporation, its successors and
assigns, and upon the Employee and his legal representatives. This
Agreement constitutes a personal service agreement, and the performance of
the Employee's obligations hereunder may not be transferred or assigned by
the Employee.
12. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be
construed as a waiver or relinquishment of future compliance therewith,
and said terms, conditions and provisions shall remain in full force and
effect. No waiver of any term or condition of this Agreement on the part
of either party shall be effective for any purpose whatsoever unless such
waiver is in writing and signed by such party.
13. GOVERNING LAW.
This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Colorado without regard to
principles of conflict of laws.
<PAGE> 7
14. HEADINGS.
The headings of paragraphs are inserted for convenience and shall not
affect any interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Xenometrix, Inc.
By: /s/ Stephen J. Sullivan
-----------------------------------
Its: PRESIDENT AND CEO
-----------------------------------
PAUL J. KOIVUNIEMI
/s/ PAUL J. KOIVUNIEMI
--------------------------------------
<PAGE> 8
SCHEDULE I
Development, manufacture or sale of gene activity profiling assays, products or
systems, and in vitro and in vivo toxicity, mutagenicity or carcinogenicity
assays, products or systems marketed to the pharmaceutical, biotechnology,
chemical, consumer products and/or environmental companies that test new
chemical entities or test for environmental contaminants.
<PAGE> 1
EXHIBIT 10.32
AMENDMENT
This document, dated January 16, 1998, amends the Employment Agreement, dated
October 5, 1995 between Xenometrix, Inc. and Ronald L. Hendrick. Section 6(d)
of the Employment Agreement is hereby cancelled and replaced with the
following Section 6(d):
(d) If the Employee's employment shall be terminated by the Corporation
pursuant to Section 5(d) or (f) hereof, then the corporation shall
continue to pay the Employee his regular salary through the date which
is six months after the Date of Termination; if the Employee's
employment shall be terminated by the Corporation pursuant to Section
5(e) hereof or as a result of a change of control of the corporation
or of its Board of Directors, then the corporation shall continue to
pay the Employee his regular salary through the date which is twelve
months after the Date of Termination; provided, however, that in any
case, the Corporation's obligation to pay such salary shall terminate
at such time as the Employee commences any alternative full-time
employment. Notwithstanding the foregoing, the Corporation will be
obligated to reimburse the Employee for reimbursable expenses (to the
extent provided in Section 3(c) hereof) accrued through the Date of
Termination. The Employee shall also be entitled to receive a payment
for (i) any accrued but unused vacation days and (ii) a pro rata
portion of any cash bonus due pursuant to Section 3(b) hereof. If the
Employee's employment shall be terminated by the Corporation pursuant
to Section 5(d), (e) or (f) hereof, and if the Employee shall be
ineligible to participate in any of the Corporation's fringe benefit
plans or arrangements as a result of his ceasing to be an employee of
the Corporation, then the Corporation shall arrange to provide the
Employee with substantially equivalent benefits as if he remained
employed by the Corporation until the earlier of (i) six months, if
terminated under Section 5(d) or (f), or twelve months, if terminated
under Section 5(e) at no additional expense to the Employee.
XENOMETRIX, INC. RONALD L. HENDRICK
By:
---------------------------- --------------------------
Its:
----------------------------
<PAGE> 1
EXHIBIT 10.33
AMENDMENT
This document, dated January 16, 1998, amends the Employment Agreement, dated
October 5, 1995 between Xenometrix, Inc. and Pauline Gee. Section 6(d) of the
Employment Agreement is hereby cancelled and replaced with the following Section
6(d):
(d) If the Employee's employment shall be terminated by the Corporation
pursuant to Section 5(d) or (f) hereof, then the corporation shall
continue to pay the Employee his regular salary through the date which
is six months after the Date of Termination; if the Employee's
employment shall be terminated by the Corporation pursuant to Section
5(e) hereof or as a result of a change of control of the corporation
or of its Board of Directors, then the corporation shall continue to
pay the Employee his regular salary through the date which is twelve
months after the Date of Termination; provided, however, that in any
case, the Corporation's obligation to pay such salary shall terminate
at such time as the Employee commences any alternative full-time
employment. Notwithstanding the foregoing, the Corporation will be
obligated to reimburse the Employee for reimbursable expenses (to the
extent provided in Section 3(c) hereof) accrued through the Date of
Termination. The Employee shall also be entitled to receive a payment
for (i) any accrued but unused vacation days and (ii) a pro rata
portion of any cash bonus due pursuant to Section 3(b) hereof. If the
Employee's employment shall be terminated by the Corporation pursuant
to Section 5(d), (e) or (f) hereof, and if the Employee shall be
ineligible to participate in any of the Corporation's fringe benefit
plans or arrangements as a result of his ceasing to be an employee of
the Corporation, then the Corporation shall arrange to provide the
Employee with substantially equivalent benefits as if he remained
employed by the Corporation until the earlier of (i) six months, if
terminated under Section 5(d) or (f), or twelve months, if terminated
under Section 5(e) at no additional expense to the Employee.
XENOMETRIX, INC. PAULINE GEE
By:
------------------------------ --------------------------
Its:
------------------------------
<PAGE> 1
EXHIBIT 10.34
AMENDMENT
This document, dated January 16, 1998, amends the Employment Agreement, dated
September 19, 1997 between Xenometrix, Inc. and Mark B. Benjamin. Section 6(d)
of the Employment Agreement is hereby cancelled and replaced with the following
Section 6(d):
(d) If the Employee's employment shall be terminated by the Corporation
pursuant to Section 5(d) or (f) hereof, then the corporation shall
continue to pay the Employee his regular salary through the date which
is six months after the Date of Termination; if the Employee's
employment shall be terminated by the Corporation pursuant to Section
5(e) hereof or as a result of a change of control of the corporation
or of its Board of Directors, then the corporation shall continue to
pay the Employee his regular salary through the date which is twelve
months after the Date of Termination; provided, however, that in any
case, the Corporation's obligation to pay such salary shall terminate
at such time as the Employee commences any alternative full-time
employment. Notwithstanding the foregoing, the Corporation will be
obligated to reimburse the Employee for reimbursable expenses (to the
extent provided in Section 3(c) hereof) accrued through the Date of
Termination. The Employee shall also be entitled to receive a payment
for (i) any accrued but unused vacation days and (ii) a pro rata
portion of any cash bonus due pursuant to Section 3(b) hereof. If the
Employee's employment shall be terminated by the Corporation pursuant
to Section 5(d), (e) or (f) hereof, and if the Employee shall be
ineligible to participate in any of the Corporation's fringe benefit
plans or arrangements as a result of his ceasing to be an employee of
the Corporation, then the Corporation shall arrange to provide the
Employee with substantially equivalent benefits as if he remained
employed by the Corporation until the earlier of (i) six months, if
terminated under Section 5(d) or (f), or twelve months, if terminated
under Section 5(e) at no additional expense to the Employee.
XENOMETRIX, INC. MARK B. BENJAMIN
By:
------------------------------- ------------------------------
Its:
-------------------------------
<PAGE> 1
EXHIBIT 10.35
AMENDMENT
This document, dated January 16, 1998, amends the Employment Agreement, dated
December 9, 1997, between Xenometrix, Inc. and Paul J. Koivuniemi. Section 6(d)
of the Employment Agreement is hereby cancelled and replaced with the following
Section 6(d):
(d) If the Employee's employment shall be terminated by the Corporation
pursuant to Section 5(d) or (f) hereof, then the corporation shall
continue to pay the Employee his regular salary through the date which
is six months after the Date of Termination; if the Employee's
employment shall be terminated by the Corporation pursuant to Section
5(e) hereof or as a result of a change of control of the corporation
or of its Board of Directors, then the corporation shall continue to
pay the Employee his regular salary through the date which is twelve
months after the Date of Termination; provided, however, that in any
case, the Corporation's obligation to pay such salary shall terminate
at such time as the Employee commences any alternative full-time
employment. Notwithstanding the foregoing, the Corporation will be
obligated to reimburse the Employee for reimbursable expenses (to the
extent provided in Section 3(c) hereof) accrued through the Date of
Termination. The Employee shall also be entitled to receive a payment
for (i) any accrued but unused vacation days and (ii) a pro rata
portion of any cash bonus due pursuant to Section 3(b) hereof. If the
Employee's employment shall be terminated by the Corporation pursuant
to Section 5(d), (e) or (f) hereof, and if the Employee shall be
ineligible to participate in any of the Corporation's fringe benefit
plans or arrangements as a result of his ceasing to be an employee of
the Corporation, then the Corporation shall arrange to provide the
Employee with substantially equivalent benefits as if he remained
employed by the Corporation until the earlier of (i) six months, if
terminated under Section 5(d) or (f), or twelve months, if terminated
under Section 5(e) at no additional expense to the Employee.
XENOMETRIX, INC. PAUL J. KOIVUNIEMI
By:
------------------------------ ---------------------------
Its:
------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 69
<SECURITIES> 0
<RECEIVABLES> 195
<ALLOWANCES> 35
<INVENTORY> 85
<CURRENT-ASSETS> 522
<PP&E> 1,326
<DEPRECIATION> 570
<TOTAL-ASSETS> 1,593
<CURRENT-LIABILITIES> 1,879
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> (289)
<TOTAL-LIABILITY-AND-EQUITY> 1,593
<SALES> 394
<TOTAL-REVENUES> 394
<CGS> 304
<TOTAL-COSTS> 304
<OTHER-EXPENSES> 1,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 277
<INCOME-PRETAX> (1,883)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,883)
<EPS-PRIMARY> (0.64)
<EPS-DILUTED> (0.64)
</TABLE>
