<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 SEPTEMBER 30, 1998
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.
(Exact name of small business issuer as specified in its charter)
DELAWARE 04-3166089
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
2425 NORTH 55TH STREET
BOULDER, CO 80301
(Address of principal executive offices)
(303) 447-1773
(Issuers telephone number)
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 NOVEMBER 6, 1998
Transitional Small Business Disclosure Format Yes No X
--- ---
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XENOMETRIX, INC
FORM 10-QSB
FOR THE PERIOD ENDED SEPTEMBER 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<S> <C>
Balance Sheet - September 30, 1998......................................Page 3
Statement of Operations - Quarters ended September 30, 1998 and 1997....Page 4
Statement of Cash Flows - Quarters ended September 30, 1998 and 1997....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 6. Exhibits and Reports on Form 8-K.....................................Page 13
Signatures....................................................................Page 14
</TABLE>
2
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Part One--Financial Information
XENOMETRIX, INC.
Balance Sheet
September 30, 1998
(Unaudited)
Assets
<TABLE>
<S> <C>
Cash $ 100,000
Accounts receivable, net 227,000
Inventory 153,000
Prepaid insurance 116,000
Other current assets 40,000
------------
Total current assets 636,000
Property and equipment, net 600,000
Patents, net 467,000
------------
$ 1,703,000
============
Liabilities and Stockholders' Equity
Accounts payable $ 566,000
Accrued interest payable 165,000
Accrued salaries and wages 220,000
Other accrued liabilities 292,000
Senior promissory notes, net of discount 1,478,000
------------
Total current liabilities 2,721,000
------------
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;
2,948,000 shares issued and outstanding 3,000
Additional paid-in capital 16,093,000
Accumulated deficit (17,114,000)
------------
Total stockholders' equity (1,018,000)
------------
$ 1,703,000
============
</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
September 30,
------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Revenue:
Products and services $ 33,000 $ 199,000
Licensing revenue 300,000 --
----------- -----------
Total revenue 333,000 199,000
Cost of revenue:
Cost of products and services 38,000 145,000
Cost of licensing revenue 68,000 --
----------- -----------
Total cost of revenue 106,000 145,000
----------- -----------
Gross profit 227,000 54,000
----------- -----------
Research and development 117,000 373,000
Selling, general and administrative 395,000 465,000
----------- -----------
Total operating expense 512,000 838,000
----------- -----------
Operating loss (285,000) (784,000)
Interest expense, net (131,000) (110,000)
----------- -----------
Net loss $ (416,000) $ (894,000)
=========== ===========
Loss per common share-basic $ (0.14) $ (0.30)
=========== ===========
Weighted average shares outstanding 2,948,000 2,947,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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XENOMETRIX, INC.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
September 30,
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(416,000) $(894,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 91,000 88,000
Amortization of note discount 83,000 82,000
Provision for doubtful accounts (5,000) --
Changes in assets and liabilities:
Accounts receivable (107,000) 93,000
Receivable from termination of operating lease -- 115,000
Inventory (98,000) (7,000)
Prepaid insurance 65,000 49,000
Other current assets 12,000 (44,000)
Accounts payable and accrued liabilities 298,000 26,000
--------- ---------
Net cash used in operating activities (77,000) (492,000)
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures -- (2,000)
Patent acquisition cost (164,000) (8,000)
--------- ---------
Net cash used in investing activities (164,000) (10,000)
--------- ---------
Net decrease in cash (241,000) (502,000)
Cash and cash equivalents at beginning of period 341,000 603,000
--------- ---------
Cash and cash equivalents at end of period $ 100,000 $ 101,000
========= =========
</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 SEPTEMBER 30, 1998
(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, 1998.
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, 1998.
2. Senior Promissory Notes
Between June 20, 1997 and January 12, 1998, Xenometrix issued Senior promissory
notes, (the "Notes") in the total amount of $1,500,000 to serve as bridge
financing. The Notes are collateralized by a security interest in all of the
assets of the Company. The Notes were originally due March 25, 1998. The
maturity date on the Notes has been extended several times, most recently until
February 25, 1999, (see Note 5). The Notes bear interest at 12% per annum. In
the event of a sale of the Company prior to the maturity date, the Notes are due
at the closing of such sale. In connection with the issuance of these Notes,
Xenometrix issued warrants to purchase 499,995 shares of common stock. In
consideration for the extension of the due date on the Notes to February 25,
1999, the exercise price of the warrants was reduced to $0.125 per share and the
Company agreed to continue to pay 38.5% of all gross licensing revenues received
during the extension period to the Note holders, as payment against the accrued
interest and principal due on the Notes. In the event of default by the Company
on the Notes, the interest rate will increase to 18% per annum, the Note holders
will have the right to appoint a majority of the Board of Directors of the
Company and the Company's assets will be subject to foreclosure.
3. Earnings (Loss) Per Common Share
Effective for the quarter ended September 30, 1998, net loss per common share is
computed using the Financial Accounting Standards Board's 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
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Opinion 15. EPS for all prior periods has been restated to conform with the
requirements of SFAS No. 128.
Basic loss per common share is computed by dividing the net loss by the
weighted-average number of common shares outstanding during the period.
Diluted loss per 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, they are excluded
from the Company's calculation of diluted loss per share.
4. Recently Issued Accounting Standards
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131, which is effective for fiscal
years beginning after December 15, 1997, establishes new disclosure requirements
for operating segments, including products, services, geographic areas, and
major customers. The Company has adopted SFAS No. 131 for the 1999 fiscal year,
but does not expect the new accounting standard to have a material effect on the
Company's reported financial results.
5. Subsequent Events
On October 12, 1998, Xenometrix entered into a license agreement with Gene
Logic, Inc. ("Gene Logic") granting Gene Logic a non-exclusive license to the
gene expression profiling claims contained in issued U. S. and European patents.
The license incorporates up-front fees and a potential royalty stream for
Xenometrix, as well as potential future research collaborations between the
parties.
On October 25, 1998, Xenometrix entered into an agreement with the holders of
the Notes extending the maturity date of the Notes to February 25, 1999 from
October 25, 1998. In consideration for this extension, the exercise price of the
499,995 warrants previously issued to the Note holders was reduced to $0.125 per
share from $0.37 per share. The interest rate on the Notes remains at 12% per
annum and Xenometrix will continue to pay 38.5% of all gross licensing revenues
received during the extension period to the Note holders as payment against the
outstanding interest and principal due on the Notes. In the event of a sale of
the Company prior to February 25, 1999, the Notes will be due at the closing of
such sale.
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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
appearing elsewhere in this Report. Except for the historical information
contained herein, this Report 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 fiscal year ended June 30, 1998.
OVERVIEW
Initially, the Company's efforts were focused upon commercializing its
technology in the field of molecular toxicology. Accordingly, the Company's
resources were directed primarily at the product safety and toxicology markets.
In early 1997, the Company concluded that its proprietary gene profiling
technology may provide valuable information that could be used by pharmaceutical
researchers to optimize drug leads. While the Company has continued to serve the
drug safety and toxicology market, it has been focusing 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.
Recently, the Company has put considerable effort into the licensing of its
intellectual property. On January 22, 1998, the Company announced that it had
been granted a broad basic patent by the European Patent Office covering most
gene expression profiles resulting from the exposure of eukaryotic cells
(including human, animal and yeast cells) to pharmaceutical compounds and other
chemical entities. On September 22, 1998, the United States Patent and Trademark
Office issued a patent to the Company covering similar claims in the United
States. The Company plans to aggressively pursue licensing of these patents and
entering into broader business collaborations with parties whose current or
future business activities may be covered by the claims contained in these two
patents.
The timing and amount of revenues from sales of products and services to the
drug discovery and development market and to the toxicology and product safety
markets cannot be predicted with certainty. Similarly, the Company's ability to
enter into license agreements and meaningful collaborative arrangements 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.
8
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As of November 5, 1998 the Company had cash of approximately $100,000. The
Company estimates that its current resources together with projected collections
on accounts receivable from customers will be sufficient to meet its operating
needs through approximately December 1, 1998. Xenometrix is currently in
discussions with several companies regarding licensing of the Company's U. S.
and European gene profiling patents, and is hopeful that additional revenue from
these licenses will be sufficient to fund the Company's operating needs for the
next few months.
The Company has royalty obligations to Harvard University which are currently
past due. The Company also has $1,500,000 of bridge notes which are due on
February 25, 1999, subject to further extension. The Company believes that it is
unlikely that it can generate sufficient licensing revenue to fund the Company's
operations, pay the amounts due to Harvard and pay off the Notes on the maturity
date. Accordingly, it is seeking strategic partnerships that may satisfy all of
these needs, including but not limited to, the sale of the Company. In the event
the Company cannot raise additional capital or does not generate sufficient
licensing revenue to fund operations, pay the amounts due to Harvard and repay
the Notes on the maturity date, it will seek to secure a further extension of
the maturity date of the notes. In addition, the Company will evaluate other
options including, but not limited to, further curtailing or suspending its
operations. (See Liquidity and Capital Resources).
RESULTS OF OPERATIONS
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997
Revenue. For the quarter ended September 30, 1998, revenue increased 67% to
$333,000 from $199,000 reported in the comparable quarter of the prior year. The
increase was attributable to revenue from up-front licensing fees relating to
the Company's recently issued gene expression profiling patents in the United
States and Europe. Sales of products and service revenue from the Company's
client research laboratory declined 83% to $33,000, from $199,000 reported in
the prior year, due to a decline in the demand for assay kits and a reduction in
the level of completed laboratory service work. During the current quarter,
however, the Company completed a substantial portion of the work on a client
research laboratory contract for a major international pharmaceutical company
that is evaluating the Company's technology. In accordance with the Company's
past practices, the revenue and costs associated with performing this work will
be recognized in the quarter in which the work is completed.
Gross Profit. For the quarter ended September 30, 1998, gross profit
increased to $227,000 from $54,000 reported in the prior year. The increase in
gross profit was due to the large portion of total revenue from licensing fees
and option payments. The cost of licensing revenue was $68,000, representing
royalties due to Harvard University under the Company's existing licensing
agreement and a portion of the amortization of the costs associated with the
patents. Gross profit margins on revenue from sales of products and services
were -15% in
9
<PAGE> 10
the current fiscal year, primarily due to fixed manufacturing costs being spread
over a relatively low revenue base.
Research and Development Expenses (R&D). R&D expenses for the quarter ended
September 30, 1998 decreased 69% to $117,000 from $373,000 reported in the same
quarter of the prior year. This decrease was primarily attributable to reduced
headcount in the R&D department and personnel costs in the R&D department being
allocated to the cost of products and services sold and allocated to deferred
costs associated with client research laboratory work in progress. Laboratory
supplies expense and most other expenses in the R&D department were also down in
the current quarter, compared to the comparable quarter of the prior year. Also,
in the quarter ended September 30, 1997, personnel costs from other departments
were allocated to the R&D department, as scientists from these areas assisted
with research and product development projects.
Selling, General and Administrative Expenses (SG&A). For the quarter ended
September 30, 1998, SG&A expenses were $395,000, down 15% from $465,000 in the
prior year. This decrease was primarily attributable to lower business
development, legal, finance, accounting and administrative costs resulting from
personnel reductions in February 1998 and lower Board of Directors costs
associated with reducing the size of the Board and replacing cash compensation
to Board members with increased stock option grants. These cost savings were
partially offset by higher costs for directors and officers liability insurance.
Interest Expense, Net. During the quarter ended September 30, 1998, the
Company incurred net interest expense of $131,000 compared to $110,000 in the
comparable quarter of the prior fiscal year. The increase in net interest
expense in the current quarter is primarily due to the higher average balance
due on the Notes in the current quarter. The net interest expense incurred in
the both quarters includes interest accrued on the Notes at the stated interest
rate and the amortization of the values attributable to the warrants issued in
conjunction with the Notes.
Net Loss. For the quarter ended September 30, 1998, the net loss decreased to
$416,000 or $0.14 per share from the net loss of $894,000 or $0.30 per share,
reported for the comparable quarter of 1997.
IMPACT OF YEAR 2000 ISSUES
The Year 2000 issue is related to computer software utilizing two digits
rather than four to define the appropriate year. As a result, any of the
Company's computer programs or any of the Company's suppliers or vendors that
have date sensitive software may incur system failures or generate incorrect
data if "00" is recognized as 1900 rather than 2000.
The Company has evaluated the proprietary software used to facilitate
performing, analyzing and interpreting the results of its assays, and the
proprietary software used in conjunction with its bioinformatics data base, and
found them to appropriately address the date issues associated with the year
2000. The Company believes that all dates in its proprietary software are
10
<PAGE> 11
stored with either a minimum of four digits for the year or as a text string,
thereby preventing inappropriate sequencing of date sensitive information. While
the Company believes that its proprietary software will not produce any material
problems, erroneous calculations or degradation of performance as a result of
Year 2000 issues, users are advised that the Company's software must be run on
Year 2000 compliant platforms.
The Company plans to verify whether its major suppliers, service providers
and financial institutions are Year 2000 compliant, however there can be no
assurance that the systems and networks of its key suppliers and customers will
not be affected by Year 2000 issues, which could have an adverse effect on the
Company's business, operating results and financial condition. The Company
believes, based upon the evaluations performed upon its proprietary software and
the claims of Year 2000 compliance made by the providers of non-proprietary
software used by the Company, that the impact of Year 2000 will not be material.
However, to the extent the Company or third parties upon which it relies do not
timely achieve Year 2000 readiness, the Company's results of operations may be
adversely affected.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had cash of $100,000. During the three
month period ended September 30, 1998, $77,000 was used to fund Xenometrix'
operations, $164,000 was invested in patents, and there were no cash resources
generated from or used for financing activities.
As of November 5, 1998, the Company had cash of approximately $100,000
compared with $341,000 at June 30, 1998. The Company estimates that its current
resources together with projected collections on accounts receivable from
customers will be sufficient to meet its operating needs through approximately
December 1, 1998. Xenometrix is currently in discussions with several companies
regarding licensing of the Company's U. S. and European gene profiling patents,
and is hopeful that additional revenue from these licenses will be sufficient to
fund the Company's operating needs for the next few months.
In order to fund its operations, the Company has borrowed $1,500,000 under a
short-term bridge financing line of credit. The due date on the Notes issued
under the line of credit has been extended several times, most recently until
February 25, 1999. In consideration for the extension, Xenometrix agreed to
reduce the exercise price of the 499,995 warrants (the "Warrants") issued in
conjunction with the Notes to $0.125 per share and agreed to continue to pay to
the Note holders a total of 38.5% of all gross licensing revenues received
during the extension period. These payments will be applied first to the accrued
interest payable on the Notes and then applied to reduce the principal balance
due on the Notes. In conjunction with the extension, the Note holders agreed to
maintain the interest rate on the Notes at 12% and further agreed that in the
event that the Company is acquired by a third party at a price per share that is
greater than the exercise price of the Warrants, to surrender the Warrants at
the closing of such acquisition in exchange for either cash or freely tradable
common stock of the acquiring company in an aggregate amount equal to the
difference between the acquisition price per share and the exercise price per
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share of the warrants, multiplied by the total number of Warrants held by the
Note holders.
The Company's principal patents relate to gene expression profiling.
Xenometrix shares ownership of these patents with Harvard University ("Harvard")
and has an exclusive world-wide license (the "Agreement") to Harvard's portion
of the intellectual property. At June 30, 1998, the Company determined that it
owed Harvard approximately $108,000 under the Agreement, which was due and
payable on August 29, 1998. Failure to make payments when due constitutes an
event of default under the Agreement. On September 30, 1998, the Company
received written notice of default from Harvard. The Company's continued failure
to make such payment within ninety days after receipt by the Company of a
written notice of such event of default from Harvard, is grounds for termination
of the Agreement by Harvard. As of November 5, 1998, this amount had not been
paid, due to the Company's lack of available funds. In the event that this
payment is not made within the timeframe outlined above, the Company could lose
its license to Harvard's ownership interest in the patents which would have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company believes that it is unlikely that it can generate sufficient
licensing revenue to fund the Company's operations, pay the amounts due to
Harvard and pay off the Notes on the maturity date. Accordingly, it is seeking
strategic partnerships that may satisfy all of these needs, including but not
limited to, the sale of the Company. In the event the Company cannot raise
additional capital or does not generate sufficient licensing revenue to fund
operations, pay the amounts due to Harvard and repay the notes it will seek to
secure a further extension of the maturity date of the notes. In addition, the
Company will evaluate other options including, but not limited to, further
curtailing or suspending its operations.
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PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.44* License agreement dated September 30, 1998 between Affymetrix, Inc.
and the Registrant.
10.45* License agreement dated October 12, 1998 between Gene Logic, Inc.
and the Registrant.
10.46 Amendment to the Senior Line of Credit Agreement and Notes, dated as
of October 25, 1998 by and among The Aries Domestic Fund, L.P., The Aries
Fund, a Cayman Island Trust and the Registrant.
10.47 Form of warrant issued to The Aries Domestic Fund, L.P. and The
Aries Fund, a Cayman Island Trust.
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.
----------------
* Xenometrix is applying for confidential treatment with respect to
portions of this exhibit.
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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
November 13, 1998 Stephen J. Sullivan
President, Chief Executive Officer
And Director
/s/ Ronald L. Hendrick
November 13, 1998 Ronald L. Hendrick
Executive Vice President and Chief Financial Officer
Principal Accounting and Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
10.44* License agreement dated September 30, 1998 between Affymetrix, Inc.
and the Registrant.
10.45* License agreement dated October 12, 1998 between Gene Logic, Inc.
and the Registrant.
10.46 Amendment to the Senior Line of Credit Agreement and Notes, dated as
of October 25, 1998 by and among The Aries Domestic Fund, L.P., The
Aries Fund, a Cayman Island Trust and the Registrant.
10.47 Form of warrant issued to The Aries Domestic Fund, L.P. and The
Aries Fund, a Cayman Island Trust.
27.1 Summary Financial Information Schedule
* Xenometrix is applying for confidential treatment with respect to
portions of this exhibit.
15
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* TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
EXHIBIT 10.44
LICENSE AGREEMENT
BETWEEN
XENOMETRIX, INC.
AND
AFFYMETRIX, INC.
1
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LICENSE AGREEMENT
This Agreement is made this 30th day of September 1998 (the "Effective Date"),
by and between Xenometrix, Inc. ("XENO"), a Delaware corporation with principal
offices at 2425 55th Street, Boulder, CO 80301-5700 and Affymetrix, Inc.
("AFFYMETRIX"), a Delaware corporation with principal offices at 3380 Central
Expressway, Santa Clara, CA 95051 to license certain technology.
RECITALS
WHEREAS, XENO is the owner or exclusive licensee of the XENO Patents relating to
certain assays, technology and intellectual property further described herein,
and desires to non-exclusively license the same to AFFYMETRIX; and
WHEREAS, AFFYMETRIX seeks to obtain certain non-exclusive license rights under
the XENO Patents, according to the terms contained herein (the "Agreement");
Now, therefore, in consideration of the foregoing and the covenants and promises
contained herein the parties agree as follows:
1. DEFINITIONS
1.1. "Affiliate" means any corporation or other business entity controlled
by, or in common control of an entity. Control, as used in the context
of a business entity, means the ownership directly or indirectly of
fifty percent (50%) of the voting securities of the person,
corporation, or other entity or a fifty percent (50%) or greater
interest in a) the income of such corporation or other entity or b) the
ability otherwise of the entity to secure that the affairs of such
person, corporation or other entity are managed in accordance with the
such entity's wishes.
1.2. "Confidential Information" means all information, compounds, data, and
Materials received by either party from the other party pursuant to
this Agreement including, without limitation, technology of each party,
subject to the exceptions set forth in Section 5.1.
1.3. "Control" or "Controlled" means, in the context of intellectual
property, possession by a party of the ability to grant a license or
sublicense in accordance with the terms of this Agreement, and without
violating the terms of any agreement by such party with any Third
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Party.
1.4. "Field" means [*].
1.5. "Harvard License Agreement" means the license agreement between the
President and Fellows of Harvard College and Venmark Ltd., now XENO,
executed on January 17, 1992 attached hereto as Exhibit B.
1.6. "Licensed Product(s)" means products or components thereof claimed in
Xeno Patents or products or components thereof made in accordance with
or by means of Licensed Processes.
1.7. "Licensed Process(es)" means the processes claimed in XENO Patents.
1.8. "Materials" means any biological or chemical entity for screening or
assays, including reagents, cells, promoters, enhancers, vectors,
plasmids, proteins and fragments thereof, peptides, antigens,
antibodies, antagonists, agonists, inhibitors, and chemicals.
1.9. "Net Sales" means the amounts received for sales or use of Licensed
Products or Licensed Processes less: a) reasonable credits or
allowances, if any, actually granted on account of price adjustments,
recalls, rejections, or return of items previously sold, b) excises,
sales taxes, value added taxes, consumption taxes, duties, or other
taxes imposed upon and paid with respect to such sales (excluding
income or franchise taxes of any kind) and c) separately itemized
insurance and transportation costs incurred in shipping Licensed
Products to such third parties. Net Sales shall not include any
transfer between AFFYMETRIX and any of its Affiliates for resale when
such Affiliate pays royalties upon such resale. If AFFYMETRIX or its
Affiliate sells Licensed Products or Processes to or through a
distributor (which is not an Affiliate), Net Sales shall be the gross
revenues from the sales to such distributor. In the event that
AFFYMETRIX or any of its Affiliates shall make any transfer to third
parties for other than monetary value in whole or in part, such
transfer shall be considered a sale hereunder for accounting and
royalty purposes. Net Sales for any such non-monetary transfers shall
be determined on a country-by-country basis and shall be the average
price of arms length sales by AFFYMETRIX or its Affiliates in such
country during the royalty reporting period in which such transfer
occurs, or if no such arms length sales occurred in such country during
such period, during the last period in which such arms length sales
occurred. If no arms length sales have occurred in a particular
country, Net Sales for
3
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 4
such transfer shall be the average price of arms length sales in all
countries. Notwithstanding the foregoing, no transfer of products or
services for evaluation testing or as samples shall be considered a
sale hereunder for accounting and royalty purposes unless such transfer
is for value. If a Licensed Product or Process is sold as part of a
system, package, or combination product or process (including
combinations of a product and a process), Net Sales shall be calculated
by multiplying the Net Sales of the combination product or process by
the fraction A/B where "A" is the average unit price of the licensed
product or process when sold separately and "B" is the average unit
price of the combination product or process. If the product or process
is not sold separately, the Parties shall negotiate in good faith the
appropriate percentage of the unit price of the combination product or
process. Net Sales shall not include technology access, support fees,
or service fees paid in partial consideration for access to nucleic
acid arrays, provided that a material profit is derived from the sale
of such nucleic acid arrays. It is assumed for the purposes of this
Agreement that the business model of AFFYMETRIX provides for the
derivation of profits primarily or substantially through the sale of
nucleic acid arrays licensed hereunder, or processes using such nucleic
acid arrays. In the event that AFFYMETRIX modifies its business
strategy such that derivation of profits is substantially or primarily
through another vehicle (such as the licensing of software or sale of
Systems) the Parties will meet and confer to negotiate in good faith a
substitute definition of Net Sales that will provide XENO with a
substantially equivalent royalty payment as if such business model was
not modified. In the event that the Parties cannot agree upon an
alternate definition of Net Sales, the Parties shall resolve the issue
by prompt, binding arbitration by the rules of the ICC.
1.10. "XENO Patents" means the U.S. patents and patent applications listed on
Exhibit A hereto, any patent applications filed prior or subsequent to
the Effective Date that claim the benefit of an early filing date of
any of the patent applications listed in Exhibit A, and any reissues,
extensions, substitutions, confirmations, re-registrations,
re-examinations, continuations, divisionals or continuations-in-part of
the foregoing patents and patent applications, as well as all foreign
counterparts or equivalents thereof.
1.11. "Third Party" means any entity other than (i) AFFYMETRIX and any of its
Affiliates, and (ii) XENO and any of its Affiliates.
2. LICENSES
4
<PAGE> 5
2.1. Grant of Licenses Under the XENO Patents from XENO to AFFYMETRIX.
2.1.1. Non-Exclusive License to XENO Patents. XENO hereby grants to
AFFYMETRIX and its Affiliates a non-exclusive, worldwide
license in the Field, without the right to sublicense under
XENO's ownership interest in the XENO Patents to make, use,
have made, sell, have sold, offer for sale, import, export or
otherwise exploit any process, composition of matter or other
invention claimed in the XENO Patents. Licensed Products shall
enjoy the benefit of this license for any Third Party who
purchases Licensed Product, however, the license shall only
apply to those Licensed Products that are purchased by the
Third Party from Affymetrix.
2.1.2. Non-Exclusive Sublicense to XENO Patents under the Harvard
License Agreement. XENO hereby grants to AFFYMETRIX and its
Affiliates a non-exclusive, worldwide sublicense in the Field,
without the right to sublicense, under XENO's right to
sublicense the XENO Patents in the Harvard License Agreement
to make, use, have made, sell, have sold, offer for sale,
import, export or otherwise exploit any process, composition
of matter or other invention claimed in the XENO Patents.
AFFYMETRIX acknowledges the Harvard License Agreement and
XENO's and AFFYMETRIX's duties and obligations thereunder.
Licensed Products shall enjoy the benefit of this license for
any Third Party who purchases Licensed Product, however, the
license shall only apply to those Licensed Products that are
purchased by the Third Party from Affymetrix.
3. COMPENSATION
3.1. Compensation for the XENO Patents License.
3.1.1. XENO Patent Licenses and Rights.
3.1.1.1 Payments As consideration for the licenses and rights
granted to AFFYMETRIX herein, AFFYMETRIX has, or will pay to
XENO:
(a) [*];
(b) [*] payment of $[*] fee and for i) access to the
technology licensed hereunder; and ii) assistance from
XENO to Affymetrix in toxicity chip
5
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 6
design. The chip design assistance component shall be
negotiated in good faith between the parties after the
conclusion of this Agreement, but shall provide for
technical assistance [*];
(c) an earned royalty of [*] percent [*] for sales in a
specific country which has patents that cover the
Licensed Products and which have issued [*]. It is
understood that no earned royalty is payable on products
and processes not specifically designed, labeled or
marketed for use in the Field.
The [*] fee paid above shall be considered [*] to constitute an up-front
payment for technology hereunder. [*].
3.1.1.2 Duration of Compensation
Compensation for the XENO Patents License will be due by
AFFYMETRIX to XENO until the termination of this
Agreement and at the most until the last expiration date
of all XENO Patents.
3.1.2. Royalty Reports, and Payments. Beginning on the Effective
Date, AFFYMETRIX shall make non-audited written reports (even
if there are no sales) and earned royalty payments to within
sixty (60) days after the end of the each calendar quarter.
These reports shall state the Net Sales of Licensed Product(s)
and Licensed Service(s) during such completed calendar
quarter, and resulting calculations of royalty payment due
XENO for such completed calendar quarter. Concurrent with the
making of each such report, AFFYMETRIX shall include payment
due XENO of royalties for the calendar quarter covered by such
report. The royalty will be solely due for the countries where
there is an issued XENO Patent and where a valid claim is in
effect.
3.1.3. [*].
3.1.4. Accounting. AFFYMETRIX agrees to keep and maintain records for
a period of three (3) years showing the manufacture, sale,
use, Net Sales and other income
6
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 7
according to this Agreement. Such records will include general
ledger records showing cash receipts and expenses, and records
that include sufficient detail to enable the royalties payable
hereunder by AFFYMETRIX to be determined. AFFYMETRIX further
agrees to permit its relevant books and records to be examined
by XENO confidentially pursuant to the provisions herein, from
time to time from three (3) years from the date of a
transaction to the extent necessary to verify reports provided
for above. Such examination is to be made by XENO or its
designee, at the expense of XENO except in the event that the
results of a definitive audit reveal an underreporting of
royalties due XENO of five percent (5%) or more in any
calendar year, then the audit costs shall be paid by
AFFYMETRIX.
4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of AFFYMETRIX and XENO.
Each party hereby represents and warrants:
Corporate Power. Such party is duly organized and validly existing and
in good standing under the laws of the state and/or country of its
incorporation and has all requisite corporate power and authority to
enter into this Agreement and to carry out the provisions hereof.
Due Authorization. Such party is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder.
Binding Agreement. This Agreement is a legal and valid obligation
binding upon it and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such party
does not conflict with any agreement, instrument or understanding, oral
or written, to which it is a party or by which it may be bound, nor
violate any law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it.
4.2 Harvard License Agreement. XENO represents and warrants that the
Harvard License Agreement has not at the date hereof expired, been
terminated by either XENO or the President and Fellows of Harvard
College and that XENO has not at the date hereof received
7
<PAGE> 8
nor given notice of termination for breach of the Harvard License
Agreement. XENO represents and warrants to use best efforts to maintain
the Harvard License Agreement, including, but not limited to complying
with its obligations to pay the compensation due for the Harvard
License Agreement. XENO agrees to notify AFFYMETRIX of any allegation
by Harvard of XENO having breached the Harvard License Agreement. XENO
warrants that to the best of its knowledge after reasonable inquiry it
has the right under the Harvard License Agreement to make the grants
herein.
4.3 XENO represents and warrants that, under the non-Harvard owned patents
referred to herein that it has the right to make the grants herein.
XENO represents that it is not aware of patents owned or controlled by
XENO other than those licensed herein which are needed or desirable to
practice the methods licensed hereunder.
4.4 Negation of Warranties
Except as expressly set forth in this Agreement, XENO MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF
THE LICENSED PRODUCTS OR SERVICES WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR IMPLED
WARRANTIES.
4.5 Infringement. AFFYMETRIX hereby agrees to notify XENO immediately of
any claim it receives for alleged patent infringement by AFFYMETRIX of
Third Party patents through and specifically directed to use of XENO
Patents Licenses and Rights.
8
<PAGE> 9
5. CONFIDENTIALITY
5.1. Confidential Information. Except as expressly provided herein, the
parties agree that, for the Term and five (5) years thereafter, the
receiving party shall keep completely confidential and shall not
publish or otherwise disclose to another party and shall not use for
any purpose other than to perform the purposes contemplated by this
Agreement any Confidential Information furnished to it by the
disclosing party hereto pursuant to this Agreement, except that to the
extent that it can be established by the receiving party by competent
proof that such Confidential Information:
was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving
party;
became generally available to the public or otherwise part of
the public domain after its disclosure and other than through
any act or omission of the receiving party in breach of this
Agreement; or
was lawfully disclosed to the receiving party by a person
other than a party hereto, or was independently developed by
the receiving party.
5.2. Permitted Use and Disclosures. Each party hereto may use or disclose
Confidential Information disclosed to it by the other party to the
extent such use or disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation,
complying with applicable law, governmental regulation or court order,
submitting information to tax or other governmental authorities, making
a permitted sublicense or otherwise exercising its rights hereunder,
provided that if a party is required to make any such disclosure of
another party's Confidential Information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to
the latter party of such disclosure and, save to the extent
inappropriate in the case of patent applications, will use reasonable
efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or otherwise).
9
<PAGE> 10
5.3. Confidential Terms. Except as expressly provided herein, each party
agrees not to disclose any material or financial terms of this
Agreement to another party without the consent of the other party, not
to be unreasonably withheld; provided, however, each party reserves the
right to make reasonable disclosures (including the redaction of
material or financial terms) as required by securities or other
applicable laws, or to actual or prospective investors or corporate
partners (including licensees and acquirers), or to accountants,
attorneys and other professional advisors on a need-to-know basis under
circumstances that ensure the confidentiality thereof, or to the extent
required by law.
5.4. Press Release. Notwithstanding the foregoing, the parties shall agree
upon a press release to announce the execution of this Agreement.
Thereafter, XENO and AFFYMETRIX may each disclose to Third Parties the
information contained in such press release without the need for
further approval by the other.
6. TERMINATION
6.1. This Agreement shall continue until the last expiration date of all
patents licensed under this Agreement.
6.2. Either party shall have the right to terminate this Agreement at any
time for a material breach of this Agreement by the other party,
provided that the non-breaching party shall have first given ninety
(90) days prior written notice (thirty (30) days in the event of
non-payment of any amounts due under this Agreement) to the breaching
party describing such breach and stating the non-breaching party's
intention to terminate this Agreement if such breach remains uncured,
and the breaching party thereafter fails to cure same within thirty
(30) days.
6.3. AFFYMETRIX may terminate this Agreement without cause at any time by
providing written notice to XENO of such termination and such
termination will be effective ninety (90) days thereafter. Any
termination pursuant to Section 6.1.3 shall not relieve AFFYMETRIX of
any obligation or liability accrued hereunder prior to such
termination, including AFFYMETRIX's obligation to pay royalties accrued
or accruable. The licenses granted under this agreement shall terminate
in the event the Agreement is terminated by AFFYMETRIX or terminated by
an arbitrator for an uncured breach by AFFYMETRIX.
7. MISCELLANEOUS
10
<PAGE> 11
7.1. Binding Effect; Assignment. This Agreement shall be binding upon the
parties' respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party (not to be
unreasonably withheld), and any such attempted assignment shall be
void; provided, that AFFYMETRIX and XENO may assign this Agreement as
part of a merger or consolidation in which the surviving entity assumes
all of AFFYMETRIX's and XENO's rights and obligations hereunder or a
sale of substantially all of the assets of such party to which this
Agreement relates. The parties agree that in the event of the
termination of the Harvard License Agreement, the President and Fellows
of Harvard College shall have the option of having rights in this
Agreement as it relates to the Harvard License Agreement assigned to it
or terminating the license from Harvard granted herein.
7.2. Effect of Waiver. No waiver of any default, condition, provisions or
breach of this Agreement shall be deemed to imply or constitute a
waiver of any other like default, condition, provision or breach of
this Agreement.
7.3. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING OUT
OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
7.4. Indemnification. AFFYMETRIX will defend, indemnify and hold XENO, its
officers, directors, employees, Affiliates and agents harmless against
any and all liability, loss, damage, claim or expense (including
attorney's fees) arising out of a suit by a Third Party from the
performance under this Agreement by AFFYMETRIX; except to the extent
such claim is caused by the negligence or willful misconduct of XENO or
a breach of a representation of XENO. XENO will defend, indemnify and
hold AFFYMETRIX, its officers, directors, employees, Affiliates and
agents harmless against any and all liability, loss, damage, claim or
expense (including attorney's fees) arising out of a suit by a Third
Party from the performance under this Agreement by XENO; except to the
extent such claim is caused by the negligence or willful misconduct of
AFFYMETRIX or a breach of a representation of AFFYMETRIX.
7.5. Patent Defense Costs. XENO will use reasonable efforts, at its
discretion to defend XENO patents at its own expense against any Third
Party infringement. AFFYMETRIX at its
11
<PAGE> 12
option may elect to join in any prosecution of Third Party infringer
initiated by XENO at AFFYMETRIX's expense. In the event that AFFYMETRIX
is sued by a Third Party for infringement of a Third Party's patent,
XENO hereby agrees, if AFFYMETRIX so requests, to provide AFFYMETRIX
with all reasonable advice or technical support that AFFYMETRIX may
reasonably request at AFFYMETRIX's expense.
7.6. Patent Marking. AFFYMETRIX agrees reasonably to mark Licensed
Product(s), covered by a product claim in the XENO device patents, (or
their containers, labels or associated materials) made, sold, or
otherwise disposed of by it under the license granted in this Agreement
with issued Licensed Patent Numbers covering the Licensed Product(s).
XENO shall from time to time provide AFFYMETRIX with issued Licensed
Patent numbers and AFFYMETRIX will make reasonable efforts to adopt
such markings within a reasonable time frame from such notice.
7.7. Diligence. AFFYMETRIX agrees to use best efforts to fulfill the
obligations of the express due diligence provision of the Harvard
License Agreement as it applies to a sublicense under the Harvard
License Agreement.
7.8. Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, act of God,
earthquake, flood, lockout, embargo, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the reasonable control and not caused by the
negligence or intentional conduct or misconduct of the nonperforming
party, and such party has exerted all reasonable efforts to avoid or
remedy such force majeure; provided, however, that in no event shall a
party be required to settle any labor dispute or disturbance.
7.9. Amendment. No modification, supplement to or waiver of this Agreement
or any Addendum hereto or any of their provisions shall be binding upon
a party hereto unless made in writing and duly signed by an authorized
representative of both XENO and AFFYMETRIX. In no event may the terms
of this Agreement be changed, deleted, supplemented or waived by any
notice, purchase order, receipt, acceptance, bill of lading or other
similar form of document. A failure of either party to exercise any
right or remedy hereunder, in whole or in part, or on one or more
occasions, shall not be deemed either a waiver of such right or remedy
to the extent not exercised, or of any other right or remedy, on such
occasion or a waiver of any right or remedy on any succeeding occasion.
12
<PAGE> 13
7.10. Entire Agreement. This Agreement, and each Exhibit attached hereto, and
each supplemental written agreement contemplated hereunder, sets forth
the entire understanding and agreement of the parties as to the subject
matter thereof, and there are no other understandings, representations
or promises, written or verbal, not set forth herein or on which either
party has relied. If any provisions of any such Addendum or
supplemental written agreement conflict with any provisions set forth
in this Agreement, the provisions of this Agreement shall take
precedence, unless such Addendum or supplemental written agreement
expressly refers to the specific provision(s) of this Agreement that it
is intended to replace or modify (and which shall be limited in force
and effect to such Addendum or supplemental written agreement only).
7.11. Notices. All Notices under this Agreement shall be given in writing and
shall be addressed to the parties at the following addresses:
For XENO:
President
Xenometrix, Inc.
2425 North 55th Street
Boulder, Colorado 80301-5700
For AFFYMETRIX:
President
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, CA 95051
Notices shall be in writing and shall be deemed delivered when
received, if delivered by a courier, overnight mail service or the
like, or a week following mailing, if sent by first-class certified or
registered mail, postage prepaid.
7.12. Arbitration. The parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which
relate to either party's rights and/or obligations hereunder. It is the
objective of the parties to establish procedures to facilitate the
resolution
13
<PAGE> 14
of disputes arising under this Agreement in an expedient manner by
mutual cooperation and without resort to arbitration. The parties agree
that prior to any arbitration concerning this Agreement, XENO's CEO and
AFFYMETRIX's CEO will meet in person or by video-conferencing in a good
faith effort to resolve any disputes concerning this Agreement. Within
thirty (30) days of a formal request by either party to the other, any
party may, by written notice to the other, have such dispute referred
to their respective officers designated or their successors, for
attempted resolution by good faith negotiations, such good faith
negotiations to begin within thirty (30) days after such notice is
received. Except as otherwise provided specifically herein, any
controversy or claim under this Agreement shall be solely settled by
arbitration by one arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association (the "Association");
provided that the parties shall first use their best efforts to resolve
such dispute by negotiation. The arbitration shall be conducted in Salt
Lake City, Utah. The arbitrator shall be selected by the joint
agreement of the parties, but if they do not so agree within twenty
(20) days of the date of a request for arbitration, the selection shall
be made pursuant to the rules of the Association. The decision reached
by the arbitrator shall be conclusive and binding upon the parties
hereto and may be filed with the clerk of any court of competent
jurisdiction, and a judgment confirming such decision may, if desired
by any party to the arbitration, be entered in such court. Each of the
parties shall pay its own expenses of arbitration and the expenses of
the arbitrator(s) shall be equally shared; provided, however, that if
in the opinion of the arbitrator(s) any claim hereunder or any defense
or objection thereto was unreasonable, the arbitrator(s) may assess, as
part of the award, all or any part of the arbitration expenses
(including reasonable attorneys' fees) against the party raising such
unreasonable claim, defense or objection. Nothing herein set forth
shall prevent the parties from settling any dispute by mutual agreement
at any time.
7.13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard or
giving effect to its principles of conflict of laws.
7.14. Severability and Survival. This Agreement is intended to be severable.
If any provision(s) of this Agreement are or become invalid, are ruled
illegal by a court of competent jurisdiction or are deemed
unenforceable under the current applicable law from time to time in
effect during the term hereof, it is the intention of the parties that
the remainder of the Agreement shall not be affected thereby and shall
continue to be construed to the maximum extent permitted by law at such
time. It is further the intention of the parties that in lieu of each
14
<PAGE> 15
such provision which is invalid, illegal, or unenforceable, there shall
be substituted or added as part of this Agreement by such court of
competent jurisdiction a provision which shall be as similar as
possible, in economic and business objectives as intended by the
parties to such invalid, illegal or unenforceable provision, but shall
be valid, legal and enforceable. Unless expressly stated otherwise, any
provision intended by its meaning to survive, will survive the
expiration or any other termination of this Agreement.
7.15 Independent Contractors. The parties hereto are acting as independent
contractors and shall not be considered partners, joint venturers or
agents of the other. Neither shall have the right to act on behalf of,
or to bind, the other.
7.16 Headings. Captions and paragraph headings are for convenience only and
shall not form an interpretative part of this Agreement. Unless
otherwise specifically provided, all references to an Article
incorporate all Articles or subsections thereunder. This Agreement
shall not be strictly construed against either party hereto and maybe
executed in two or more counterparts, each of which will be deemed an
original and the same instrument.
15
<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Agreement.
By: /s/ Stephen J. Sullivan Date: 9/30/98
------------------------------- -------
Stephen J. Sullivan
CEO and President
For Xenometrix, Inc.
By: /s/ Stephen P.A. Fodor Date: 9/29/98
------------------------------- -------
Stephen P.A. Fodor
President and CEO
For Affymetrix, Inc.
16
<PAGE> 17
EXHIBIT A
EUKARYOTIC GENE PROFILING
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PATENT/ FILING COUNTRY ISSUE TITLE
APPLICATION # DATE DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
08/008,896 1/21/93 US
- --------------------------------------------------------------------------------
5,811,231 7/21/95 US 9/22/98 METHODS AND KITS FOR
MAMMALIAN GENE PROFILING
- --------------------------------------------------------------------------------
612434 1/21/94 AUSTRALIA 6/11/98
- --------------------------------------------------------------------------------
E160178 1/21/94 AUSTRIA 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 BELGIUM 11/12/97
- --------------------------------------------------------------------------------
2154265 1/21/94 CANADA
- --------------------------------------------------------------------------------
0 680 517 1/21/94 DENMARK 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 EPC 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 FRANCE 11/12/97
- --------------------------------------------------------------------------------
694 06 772.5-08 1/21/94 GERMANY 11/12/97
- --------------------------------------------------------------------------------
980400301 1/21/94 GREECE 11/12/97
- --------------------------------------------------------------------------------
0 680 517 HONG KONG
- --------------------------------------------------------------------------------
E77394 1/21/94 IRELAND 11/12/97
- --------------------------------------------------------------------------------
20035BE/98 1/21/94 ITALY 11/12/97
- --------------------------------------------------------------------------------
6-517147 1/21/94 JAPAN
- --------------------------------------------------------------------------------
0 680 517 1/21/94 LUXEMBOURG 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 MONACO 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 NETHERLANDS 11/12/97
- --------------------------------------------------------------------------------
US94/00583 1/21/94 PCT
- --------------------------------------------------------------------------------
0 680 517 1/21/94 PORTUGAL 1/19/98
- --------------------------------------------------------------------------------
9601405-5 2/13/96 SINGAPORE
- --------------------------------------------------------------------------------
0 680 517 1/21/94 SPAIN 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 SWEDEN 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 SWITZERLAND 11/12/97
- --------------------------------------------------------------------------------
0 680 517 1/21/94 UK 11/12/97
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
Procaryotic Gene Profiling
EP 651,825, granted January 14, 1998, filed July 6, 1993
priority July 6, 1992
USSN 08/231,990, filed April 21, 1994, now US 5,585,232,
issued December 17, 1996
USSN 08/374,641, filed July 21, 1995, now US 5,589,337
USSN 07/910,793, filed July 6, 1992 (now abandoned)
Singapore 9601688-6, filed February 14, 1996
Canada 2,13,9,667, filed July 6, 1993
Korea 95-700038, filed July 6, 1993
Australia 45884/93, filed July 6, 1993
Norway 95.0040, filed July 6, 1993.
18
<PAGE> 19
EXHIBIT B
HARVARD LICENSE AGREEMENT
19
<PAGE> 1
* TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
EXHIBIT 10.45
LICENSE AGREEMENT
BETWEEN
XENOMETRIX, INC.
AND
GENE LOGIC INC.
LICENSE AGREEMENT
This Agreement is made this 12th day of October 1998 (the "Effective Date"), by
and between Xenometrix, Inc. ("XENO"), a Delaware corporation with principal
offices at 2425 55th Street, Boulder, CO 80301-5700 and Gene Logic, Inc. ("GENE
LOGIC"), a Delaware corporation with principal offices at 708 Quince Orchard
Road, Gaithersburg, MD 20878 to license certain technology.
RECITALS
WHEREAS, XENO is the owner or exclusive licensee of the Xeno Patent Rights
relating to certain assays, technology and intellectual property further
described herein, and desires to non-exclusively license the same to GENE LOGIC;
and
WHEREAS, GENE LOGIC seeks to obtain certain non-exclusive license rights under
the Xeno Patent Rights, according to the terms contained herein (the
"Agreement");
Now, therefore, in consideration of the foregoing and the covenants and promises
contained herein the parties agree as follows:
1
<PAGE> 2
FINAL AGREEMENT 10/12/98
1. DEFINITIONS
1.1. "Affiliate" means any corporation or other business entity controlled
by, or in common control of an entity. Control, as used in the context
of a business entity, means the ownership directly or indirectly of
fifty percent (50%) of the voting securities of the person,
corporation, or other entity or a fifty percent (50%) or greater
interest in a) the income of such corporation or other entity or b) the
ability otherwise of the entity to secure that the affairs of such
person, corporation or other entity are managed in accordance with the
such entity's wishes.
1.2. "Confidential Information" means all information, compounds, data, and
Materials received by either party from the other party pursuant to
this Agreement including, without limitation, technology of each party,
subject to the exceptions set forth in Section 5.1.
1.3. "Control" or "Controlled" means, in the context of intellectual
property, possession by a party of the ability to grant a license or
sublicense in accordance with the terms of this Agreement, and without
violating the terms of any agreement by such party with any Third
Party.
1.4. "Field" means [ * ].
1.5. "Harvard License Agreement" means the license agreement between the
President and Fellows of Harvard College and Venmark Ltd., now XENO,
executed on January 17, 1992 attached hereto as Exhibit B.
1.6. "Kits" mean [ * ].
1.7. "Licensed Product(s)" means [ * ].
1.8. "Licensed Process(es)" means the processes claimed in Xeno Patent
Rights.
1.9. "Materials" means any biological or chemical entity for screening or
assays, including reagents, cells, promoters, enhancers, vectors,
plasmids, proteins and fragments thereof, peptides, antigens,
antibodies, antagonists, agonists, inhibitors, and chemicals.
1.10. "Net Sales" means the amounts received for sales or use of Licensed
Products less: customary trade, quantity or cash discounts actually
allowed and taken; amounts repaid
2
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 3
FINAL AGREEMENT 10/12/98
or credited by reason of rejection or return; and/or to the extent
separately stated on purchase orders, invoices or other documents or
sale, taxes levied on and/or other governmental charges made as to
production, sale, transportation, delivery or use and paid by or on
behalf of GENE LOGIC.
1.11. "XENO Patents Rights" means the rights associated with U.S. patents and
patent applications listed on Exhibit A hereto, any patent applications
filed prior or subsequent to the Effective Date that claim the benefit
of an early filing date of any of the patent applications listed in
Exhibit A, and any reissues, extensions, substitutions, confirmations,
re-registrations, re-examinations, continuations, divisionals or
continuations-in-part of the foregoing patents and patent applications,
as well as all foreign counterparts or equivalents thereof.
1.12. "Third Party" means any entity other than (i) GENE LOGIC and any of its
Affiliates, and (ii) XENO and any of its Affiliates.
2. LICENSES
2.1. Grant of Licenses Under the Xeno Patent Rights from XENO to GENE LOGIC.
2.1.1. Non-Exclusive License to Xeno Patent Rights. XENO hereby grants to GENE
LOGIC and its Affiliates a non-exclusive, worldwide license in the
Field, without the right to sublicense under XENO's ownership interest
in the Xeno Patent Rights to make, use, have made, sell, have sold,
offer for sale, import, export or otherwise exploit any process,
composition of matter or other invention claimed in the Xeno Patent
Rights. GENE LOGIC may, however, utilize the Xeno Patent Rights in
research projects conducted with or supported by corporate alliance
partners. Licensed Products shall enjoy the benefit of this license for
any Third Party who purchases Licensed Product, however, the license
shall only apply to those Licensed Products that are purchased by the
Third Party from GENE LOGIC.
2.1.2. Non-Exclusive Sublicense to Xeno Patent Rights under the Harvard
License Agreement. XENO hereby grants to GENE LOGIC and its Affiliates
a non-exclusive, worldwide sublicense in the Field, without the right
to sublicense, under XENO's right to sublicense the Xeno Patent Rights
in the Harvard License Agreement to make, use, have made, sell, have
sold, offer for sale, import, export or otherwise exploit any process,
composition of matter or other invention claimed in the Xeno Patent
Rights. GENE LOGIC acknowledges the Harvard License
3
<PAGE> 4
FINAL AGREEMENT 10/12/98
Agreement and XENO's and GENE LOGIC's duties and obligations
thereunder. Licensed Products shall enjoy the benefit of this license
for any Third Party who purchases Licensed Product, however, the
license shall only apply to those Licensed Products that are purchased
by the Third Party from GENE LOGIC.
3. COMPENSATION
3.1. Compensation for the Xeno Patent Rights License.
3.1.1. XENO Patent Licenses and Rights.
3.1.1.1 Payments As consideration for the licenses and rights
granted to GENE LOGIC herein, GENE LOGIC will pay to
XENO:
(a) A $[ * ] up-front license fee for access to
the technology licensed hereunder; and
(b) An earned royalty of [ * ] percent ([ * ] %)
for Net Sales of Licensed Products in a
specific country in which there are valid
Xeno Patent Rights that cover the Licensed
Products. It is understood that no earned
royalty is payable on products and processes
not specifically designed, labeled or
marketed for use in the Field.
(c) [ * ].
3.1.1.2 Duration of Compensation
Compensation for the XENO Patent Rights License will
be due by GENE LOGIC to XENO until the termination of
this Agreement and at the most until the last
expiration date of all Xeno Patent Rights.
3.1.2. Royalty Reports, and Payments.
Beginning on the Effective Date, GENE LOGIC shall
make non-audited written reports (even if there are
no sales) and earned royalty payments to within sixty
(60) days after the end of the each calendar quarter.
These reports shall state the Net Sales of Licensed
Product(s) during such completed calendar quarter,
and resulting calculations of royalty payment due
XENO for such completed calendar quarter. Concurrent
with the making of each such report, GENE
4
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 5
FINAL AGREEMENT 10/12/98
LOGIC shall include payment due XENO of royalties for the
calendar quarter covered by such report. The royalty will be
solely due for the countries where there is an issued XENO
Patent and where a valid claim is in effect.
3.1.3. [ * ].
3.1.4 Accounting. GENE LOGIC agrees to keep and maintain records for
a period of three (3) years showing the manufacture, sale,
use, Net Sales and other income according to this Agreement.
Such records will include general ledger records showing cash
receipts and expenses, and records that include sufficient
detail to enable the royalties payable hereunder by GENE LOGIC
to be determined. GENE LOGIC further agrees to permit its
relevant books and records to be examined by XENO
confidentially pursuant to the provisions herein, from time to
time from three (3) years from the date of a transaction to
the extent necessary to verify reports provided for above.
Such examination is to be made by XENO or its designee, at the
expense of XENO except in the event that the results of a
definitive audit reveal an underreporting of royalties due
XENO of five percent (5%) or more in any calendar year, then
the audit costs shall be paid by GENE LOGIC.
4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of GENE LOGIC and XENO.
Each party hereby represents and warrants:
Corporate Power. Such party is duly organized and validly
existing and in good standing under the laws of the state
and/or country of its incorporation and has all requisite
corporate power and authority to enter into this Agreement and
to carry out the provisions hereof.
Due Authorization. Such party is duly authorized to execute
and deliver this Agreement and to perform its obligations
hereunder.
Binding Agreement. This Agreement is a legal and valid
obligation binding upon it and enforceable in accordance with
its terms. The execution, delivery and performance of this
Agreement by such party does not conflict with any agreement,
instrument or understanding, oral or
5
* CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24b-2 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934, AS AMENDED.
<PAGE> 6
FINAL AGREEMENT 10/12/98
written, to which it is a party or by which it may be bound,
nor violate any law or regulation of any court, governmental
body or administrative or other agency having jurisdiction
over it.
4.2 Harvard License Agreement. XENO represents and warrants that
the Harvard License Agreement has not at the date hereof
expired, been terminated by either XENO or the President and
Fellows of Harvard College. XENO represents and warrants to
use best efforts to maintain the Harvard License Agreement,
including, but not limited to complying with its obligations
to pay the compensation due for the Harvard License Agreement.
XENO agrees to notify GENE LOGIC of any allegation by Harvard
of XENO having breached the Harvard License Agreement. XENO
warrants that to the best of its knowledge after reasonable
inquiry it has the right under the Harvard License Agreement
to make the grants herein.
4.3 XENO represents and warrants that, under the non-Harvard owned
patents referred to herein that it has the right to make the
grants herein. XENO represents that it is not aware of patents
owned or controlled by XENO other than those licensed herein
which are needed or desirable to practice the methods licensed
hereunder. XENO further represents that as of the Effective
Date of this Agreement it is unaware of any adverse claims
against its ownership in the XENO Patent Rights, and will
notify GENE LOGIC of any such claim during the term of this
Agreement.
4.4 Negation of Warranties
Except as expressly set forth in this Agreement, XENO
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF
THE LICENSED PRODUCTS OR SERVICES WILL NOT INFRINGE
ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR
ANY OTHER EXPRESS OR IMPLED WARRANTIES.
4.5 Infringement. GENE LOGIC hereby agrees to notify XENO
immediately of any claim it receives for alleged patent
infringement by GENE LOGIC of Third Party patents through and
specifically directed to use of Xeno Patent Rights Licenses
and Rights.
5. CONFIDENTIALITY
6
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FINAL AGREEMENT 10/12/98
5.1. Confidential Information. Except as expressly provided herein, the
parties agree that, for the Term and five (5) years thereafter, the
receiving party shall keep completely confidential and shall not
publish or otherwise disclose to another party and shall not use for
any purpose other than to perform the purposes contemplated by this
Agreement any Confidential Information furnished to it by the
disclosing party hereto pursuant to this Agreement, except that to the
extent that it can be established by the receiving party by competent
proof that such Confidential Information:
was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure; was
generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving
party; became generally available to the public or otherwise
part of the public domain after its disclosure and other than
through any act or omission of the receiving party in breach
of this Agreement; or was lawfully disclosed to the receiving
party by a person other than a party hereto, or was
independently developed by the receiving party.
5.2. Permitted Use and Disclosures. Each party hereto may use or disclose
Confidential Information disclosed to it by the other party to the
extent such use or disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation,
complying with applicable law, governmental regulation or court order,
submitting information to tax or other governmental authorities, making
a permitted sublicense or otherwise exercising its rights hereunder,
provided that if a party is required to make any such disclosure of
another party's Confidential Information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to
the latter party of such disclosure and, save to the extent
inappropriate in the case of patent applications, will use reasonable
efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or otherwise).
7
<PAGE> 8
FINAL AGREEMENT 10/12/98
5.3. Confidential Terms. Except as expressly provided herein, each party
agrees not to disclose any material or financial terms of this
Agreement to another party without the consent of the other party, not
to be unreasonably withheld; provided, however, each party reserves the
right to make reasonable disclosures (including the redaction of
material or financial terms) as required by securities or other
applicable laws, or to actual or prospective investors or corporate
partners (including licensees and acquirers), or to accountants,
attorneys and other professional advisors on a need-to-know basis under
circumstances that ensure the confidentiality thereof, or to the extent
required by law.
5.4. Press Release. Notwithstanding the foregoing, the parties shall agree
upon a press release to announce the execution of this Agreement.
Thereafter, XENO and GENE LOGIC may each disclose to Third Parties the
information contained in such press release without the need for
further approval by the other.
6. TERMINATION
6.1. This Agreement shall continue until the last expiration date of all
patents licensed under this Agreement.
6.2. Either party shall have the right to terminate this Agreement at any
time for a material breach of this Agreement by the other party,
provided that the non-breaching party shall have first given ninety
(90) days prior written notice (thirty (30) days in the event of
non-payment of any amounts due under this Agreement) to the breaching
party describing such breach and stating the non-breaching party's
intention to terminate this Agreement if such breach remains uncured,
and the breaching party thereafter fails to cure same within thirty
(30) days.
6.3. GENE LOGIC may terminate this Agreement without cause at any time by
providing written notice to XENO of such termination and such
termination will be effective ninety (90) days thereafter. Any
termination pursuant to Section 6.1.3 shall not relieve GENE LOGIC of
any obligation or liability accrued hereunder prior to such
termination, including GENE LOGIC's obligation to pay royalties accrued
or accruable. The licenses granted under this agreement shall terminate
in the event the Agreement is terminated by GENE LOGIC or terminated by
an arbitrator for an uncured breach by GENE LOGIC.
7. MISCELLANEOUS
8
<PAGE> 9
FINAL AGREEMENT 10/12/98
7.1. Binding Effect; Assignment. This Agreement shall be binding upon the
parties' respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party (not to be
unreasonably withheld), and any such attempted assignment shall be
void; provided, that GENE LOGIC and XENO may assign this Agreement as
part of a merger or consolidation in which the surviving entity assumes
all of GENE LOGIC's and XENO's rights and obligations hereunder or a
sale of substantially all of the assets of such party to which this
Agreement relates. The parties agree that in the event of the
termination of the Harvard License Agreement, the President and Fellows
of Harvard College shall have the option of having rights in this
Agreement as it relates to the Harvard License Agreement assigned to it
or terminating the license from Harvard granted herein.
7.2. Effect of Waiver. No waiver of any default, condition, provisions or
breach of this Agreement shall be deemed to imply or constitute a
waiver of any other like default, condition, provision or breach of
this Agreement.
7.3. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING OUT
OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
7.4. Indemnification. GENE LOGIC will defend, indemnify and hold XENO, its
officers, directors, employees, Affiliates and agents harmless against
any and all liability, loss, damage, claim or expense (including
attorney's fees) arising out of a suit by a Third Party from the
performance under this Agreement by GENE LOGIC; except to the extent
such claim is caused by the negligence or willful misconduct of XENO or
a breach of a representation of XENO. XENO will defend, indemnify and
hold GENE LOGIC, its officers, directors, employees, Affiliates and
agents harmless against any and all liability, loss, damage, claim or
expense (including attorney's fees) arising out of a suit by a Third
Party from the performance under this Agreement by XENO; except to the
extent such claim is caused by the negligence or willful misconduct of
GENE LOGIC or a breach of a representation of GENE LOGIC.
7.5. Patent Defense Costs. XENO will use reasonable efforts, at its
discretion to defend Xeno Patent Rights at its own expense against any
Third Party infringement. GENE LOGIC at its option may elect to join in
any prosecution of Third Party infringer initiated by XENO at GENE
LOGIC's expense. In the event that GENE LOGIC is sued
9
<PAGE> 10
FINAL AGREEMENT 10/12/98
by a Third Party for infringement of a Third Party's patent, XENO
hereby agrees, if GENE LOGIC so requests, to provide GENE LOGIC with
all reasonable advice or technical support that GENE LOGIC may
reasonably request at GENE LOGIC's expense.
7.6. Patent Marking. GENE LOGIC agrees reasonably to mark Licensed
Product(s), covered by a product claim in the XENO device patents, (or
their containers, labels or associated materials) made, sold, or
otherwise disposed of by it under the license granted in this Agreement
with issued Licensed Patent Numbers covering the Licensed Product(s).
XENO shall from time to time provide GENE LOGIC with issued Licensed
Patent numbers and GENE LOGIC will make reasonable efforts to adopt
such markings within a reasonable time frame from such notice.
7.7. Diligence. GENE LOGIC agrees to use best efforts to fulfill the
obligations of the express due diligence provision of the Harvard
License Agreement as it applies to a sublicense under the Harvard
License Agreement.
7.8. Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, act of God,
earthquake, flood, lockout, embargo, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the reasonable control and not caused by the
negligence or intentional conduct or misconduct of the nonperforming
party, and such party has exerted all reasonable efforts to avoid or
remedy such force majeure; provided, however, that in no event shall a
party be required to settle any labor dispute or disturbance.
7.9. Amendment. No modification, supplement to or waiver of this Agreement
or any Addendum hereto or any of their provisions shall be binding upon
a party hereto unless made in writing and duly signed by an authorized
representative of both XENO and GENE LOGIC. In no event may the terms
of this Agreement be changed, deleted, supplemented or waived by any
notice, purchase order, receipt, acceptance, bill of lading or other
similar form of document. A failure of either party to exercise any
right or remedy hereunder, in whole or in part, or on one or more
occasions, shall not be deemed either a waiver of such right or remedy
to the extent not exercised, or of any other right or remedy, on such
occasion or a waiver of any right or remedy on any succeeding occasion.
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<PAGE> 11
FINAL AGREEMENT 10/12/98
7.10. Entire Agreement. This Agreement, and each Exhibit attached hereto, and
each supplemental written agreement contemplated hereunder, sets forth
the entire understanding and agreement of the parties as to the subject
matter thereof, and there are no other understandings, representations
or promises, written or verbal, not set forth herein or on which either
party has relied. If any provisions of any such Addendum or
supplemental written agreement conflict with any provisions set forth
in this Agreement, the provisions of this Agreement shall take
precedence, unless such Addendum or supplemental written agreement
expressly refers to the specific provision(s) of this Agreement that it
is intended to replace or modify (and which shall be limited in force
and effect to such Addendum or supplemental written agreement only).
7.11. Notices. All Notices under this Agreement shall be given in writing and
shall be addressed to the parties at the following addresses:
For XENO:
President
Xenometrix, Inc.
2425 North 55th Street
Boulder, Colorado 80301-5700
For GENE LOGIC:
Daniel R. Passeri
SVP, Technology and Program Management
GENE LOGIC, Inc.
708 Quince Orchard Road
Gaithersburg, MD 20878
Notices shall be in writing and shall be deemed delivered when received,
if delivered by a courier, overnight mail service or the like, or a week
following mailing, if sent by first-class certified or registered mail,
postage prepaid.
7.12. Arbitration. The parties recognize that disputes as to certain matters
may from
11
<PAGE> 12
FINAL AGREEMENT 10/12/98
time to time arise during the term of this Agreement which relate to
either party's rights and/or obligations hereunder. It is the objective
of the parties to establish procedures to facilitate the resolution of
disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to arbitration. The parties agree that
prior to any arbitration concerning this Agreement, XENO's CEO and GENE
LOGIC's CEO will meet in person or by video-conferencing in a good
faith effort to resolve any disputes concerning this Agreement. Within
thirty (30) days of a formal request by either party to the other, any
party may, by written notice to the other, have such dispute referred
to their respective officers designated or their successors, for
attempted resolution by good faith negotiations, such good faith
negotiations to begin within thirty (30) days after such notice is
received. Except as otherwise provided specifically herein, any
controversy or claim under this Agreement shall be solely settled by
arbitration by one arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association (the "Association");
provided that the parties shall first use their best efforts to resolve
such dispute by negotiation. The arbitration shall be conducted in Salt
Lake City, Utah. The arbitrator shall be selected by the joint
agreement of the parties, but if they do not so agree within twenty
(20) days of the date of a request for arbitration, the selection shall
be made pursuant to the rules of the Association. The decision reached
by the arbitrator shall be conclusive and binding upon the parties
hereto and may be filed with the clerk of any court of competent
jurisdiction, and a judgment confirming such decision may, if desired
by any party to the arbitration, be entered in such court. Each of the
parties shall pay its own expenses of arbitration and the expenses of
the arbitrator(s) shall be equally shared; provided, however, that if
in the opinion of the arbitrator(s) any claim hereunder or any defense
or objection thereto was unreasonable, the arbitrator(s) may assess, as
part of the award, all or any part of the arbitration expenses
(including reasonable attorneys' fees) against the party raising such
unreasonable claim, defense or objection. Nothing herein set forth
shall prevent the parties from settling any dispute by mutual agreement
at any time.
7.13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard or
giving effect to its principles of conflict of laws.
7.14. Severability and Survival. This Agreement is intended to be severable.
If any provision(s) of this Agreement are or become invalid, are ruled
illegal by a court of competent jurisdiction or are deemed
unenforceable under the current applicable law from time to time in
effect during the term hereof, it is the intention of the parties that
the remainder of the Agreement shall not be affected thereby and shall
continue to be construed to the maximum extent permitted by law at such
time. It is further the intention of the parties that in lieu of each
such provision which is invalid, illegal, or unenforceable, there shall
be substituted or added as part of this Agreement by such court
12
<PAGE> 13
FINAL AGREEMENT 10/12/98
of competent jurisdiction a provision which shall be as similar as
possible, in economic and business objectives as intended by the
parties to such invalid, illegal or unenforceable provision, but shall
be valid, legal and enforceable. Unless expressly stated otherwise, any
provision intended by its meaning to survive, will survive the
expiration or any other termination of this Agreement.
7.15 Independent Contractors. The parties hereto are acting as independent
contractors and shall not be considered partners, joint venturers or
agents of the other. Neither shall have the right to act on behalf of,
or to bind, the other.
7.16 Headings. Captions and paragraph headings are for convenience only and
shall not form an interpretative part of this Agreement. Unless
otherwise specifically provided, all references to an Article
incorporate all Articles or subsections thereunder. This Agreement
shall not be strictly construed against either party hereto and maybe
executed in two or more counterparts, each of which will be deemed an
original and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement.
By: /s/ Stephen J. Sullivan October 14, 1998
-----------------------
Stephen J. Sullivan
CEO and President
For Xenometrix, Inc.
By: /s/Mark D. Gessler October 12, 1998
------------------
Mark D. Gessler
SVP, Corporate Development and CFO
For GENE LOGIC Inc.
13
<PAGE> 14
FINAL AGREEMENT 10/12/98
14
<PAGE> 15
FINAL AGREEMENT 10/12/98
EXHIBIT A
EUKARYOTIC GENE PROFILING
<TABLE>
<CAPTION>
PATENT/ FILING ISSUE
APPLICATION # DATE COUNTRY DATE TITLE
<S> <C> <C> <C> <C>
08/008,896 1/21/93 US
5,811,231 7/21/95 US 9/22/98 Methods and Kits for Mammalian
Gene Profiling
612434 1/21/94 Australia 6/11/98
E160178 1/21/94 Austria 11/12/97
0 680 517 1/21/94 Belgium 11/12/97
2154265 1/21/94 Canada
0 680 517 1/21/94 Denmark 11/12/97
0 680 517 1/21/94 EPC 11/12/97
0 680 517 1/21/94 France 11/12/97
694 06 772.5-08 1/21/94 Germany 11/12/97
980400301 1/21/94 Greece 11/12/97
0 680 517 Hong Kong
E77394 1/21/94 Ireland 11/12/97
20035BE/98 1/21/94 Italy 11/12/97
6-517147 1/21/94 Japan
0 680 517 1/21/94 Luxembourg 11/12/97
0 680 517 1/21/94 Monaco 11/12/97
0 680 517 1/21/94 Netherlands 11/12/97
US94/00583 1/21/94 PCT
0 680 517 1/21/94 Portugal 1/19/98
9601405-5 2/13/96 Singapore
0 680 517 1/21/94 Spain 11/12/97
0 680 517 1/21/94 Sweden 11/12/97
0 680 517 1/21/94 Switzerland 11/12/97
0 680 517 1/21/94 UK 11/12/97
</TABLE>
15
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FINAL AGREEMENT 10/12/98
EXHIBIT B
HARVARD LICENSE AGREEMENT
16
<PAGE> 1
EXHIBIT 10.46
AMENDMENT TO THE SENIOR LINE OF CREDIT AGREEMENT AND NOTES
This is an Amendment to the Senior Line of Credit Agreement between Aries
Domestic Fund, the Aries Fund, a Cayman Islands Trust (the "Funds"), and
Xenometrix, Inc. (the "Company"), dated September 25, 1997 (the "Agreement") and
the Amendments of March 25th, 1998, May 25, 1998 and June 25, 1998 extending the
Maturity Date of all of the Notes to February 25, 1999, and to the Senior
Secured Promissory Notes (the "Notes") and Common Stock Warrants (the
"Warrants") issued under the Agreement.
Whereas, Xenometrix has demonstrated the ability to generate non-exclusive
licenses as evidenced by Aurora Biosciences Corporation (April 17, 1998); CEREP,
S.A. (June 5, 1998); Phase-1 Molecular Toxicology (July 27, 1998); Affymetrix,
Inc. (September 30, 1998) and Gene Logic, Inc. (October 12, 1998); and
Whereas, Xenometrix is engaged in licensing discussions with
several companies; and
Whereas, Xenometrix is engaged in discussions with other parties
that may lead to the sale of the Company,
Now therefore, the Parties agree to amend the Agreement, Notes and
Warrants, as follows:
The Funds agree to extend the Maturity Date of all of the Notes issued
under the Agreement to February 25, 1999, in exchange for Xenometrix paying to
the Funds a total of 38.5% of all gross licensing revenues received during the
extension period. Xenometrix will make these payments within five working days
of the receipt of said revenues. All payments shall be applied first to accrued
interest due on the principal balance up to the date of payment, and then to a
reduction of the principal balance.
Xenometrix agrees to make best efforts to pursue its licensing strategy
during this extension.
Xenometrix agrees to reduce the exercise price of the 499,994 warrants
previously issued to the Funds under the Agreement to $0.125 per share.
The Funds agrees to continue to charge an interest rate of 12% during the
extension period.
The Company shall not use the name of the Funds or any officer, director,
employee, affiliate or shareholder thereof without the express written consent
of the Funds and such person.
In the event of an acquisition of Xenometrix by a third party, the unpaid
principal together with any accrued interest on the Notes shall be immediately
due and payable at the closing of such acquisition. In addition, if the Company
is acquired at a price per share that is greater than the exercise price of the
Warrants, the Funds agree to surrender all outstanding Warrants at the closing
of such acquisition in exchange for either cash or registered and freely
tradable common stock of the acquiring company in an aggregate amount calculated
by subtracting the exercise price of the Warrants from price per share paid to
Xenometrix shareholders, and multiplying the difference by the number of
Warrants outstanding at the closing.
All other terms and conditions of the Agreement as amended will continue
to be in full force during the extension period.
<PAGE> 2
In witness whereof, the Parties hereto have caused this Amendment to be
executed by their respective duly authorized representative as of October 25,
1998.
XENOMETRIX, INC. THE ARIES FUND, A CAYMAN ISLAND TRUST
By: its Investment Manager, PARAMOUNT
By: /s/ Stephen J. Sullivan CAPITAL ASSET MANAGEMENT, INC.
-------------------------
Stephen J. Sullivan By: /s/ Lindsay A. Rosenwald, M.D.
President & CEO ------------------------------------
President
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner, PARAMOUNT
CAPITAL ASSET MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
-------------------------------
President
<PAGE> 1
EXHIBIT 10.47
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. ANY SUCH TRANSFER MAY ALSO BE
SUBJECT TO APPLICABLE STATE SECURITIES LAWS.
XENOMETRIX, INC.
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK
NO. 128 55,833 SHARES
FOR VALUE RECEIVED, XENOMETRIX, INC., a Delaware corporation (the
"COMPANY"), hereby certifies that THE ARIES FUND, A CAYMAN ISLANDS TRUST, or its
permitted assigns, is entitled to purchase from the Company, at any time or from
time to time commencing on SEPTEMBER 25, 1997, and prior to 5:00 P.M., New York
City time, on SEPTEMBER 25, 2007 (the "TERMINATION DATE"), 55,832 fully paid and
non-assessable shares of the Common Stock, $.001 par value per share, of the
Company (the "Common Stock") at an exercise price equal to the lesser of (a)
$2.14816 and (b) the price per share in the next placement of equity securities
of the Company where gross proceeds exceed three million dollars ($3,000,000)
(the "Private Placement"). (Hereinafter, (i) said Common Stock, together with
any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "COMMON STOCK", (ii)
the shares of the Common Stock purchasable hereunder or under any other Warrant
(as hereinafter defined) are referred to as the "WARRANT SHARES", (iii) the
aggregate purchase price payable for the Warrant Shares hereunder is referred to
as the "AGGREGATE WARRANT PRICE", (iv) the price payable for each of the Warrant
Shares hereunder is referred to as the "PER SHARE WARRANT PRICE", (v) this
Warrant, all similar Warrants issued on the date hereof and all warrants
hereafter issued in exchange or substitution for this Warrant or such similar
Warrants are referred to as the "WARRANTS" and (vi) the holder of this Warrant
is referred to as the "HOLDER" and the holder of this Warrant and all other
Warrants or Warrant Shares issued upon the exercise of any Warrant are referred
to as the "HOLDERS"). The Aggregate Warrant Price is not subject to adjustment.
The Per Share Warrant Price is subject to
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adjustment as hereinafter provided; in the event of any such adjustment, the
number of Warrant Shares shall be adjusted by dividing the Aggregate Warrant
Price by the Per Share Warrant Price in effect immediately after such
adjustment.
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Holder, in whole at any
time or in part from time to time, commencing on September 25, 1997 and prior to
the Termination Date:
(i) by the surrender of this Warrant (with the subscription form at
the end hereof duly executed) at the address set forth in Subsection 10(a)
hereof, together with proper payment of the Aggregate Warrant Price, or
the proportionate part thereof if this Warrant is exercised in part, with
payment for Warrant Shares made by certified or official bank check
payable to the order of the Company; or
(ii) by the surrender of this Warrant (with the cashless exercise
form at the end hereof duly executed) (a "CASHLESS EXERCISE") at the
address set forth in Subsection 10(a) hereof. Such presentation and
surrender shall be deemed a waiver of the Holder's obligation to pay the
Aggregate Warrant Price, or the proportionate part thereof if this Warrant
is exercised in part. In the event of a Cashless Exercise, the Holder
shall exchange its Warrant for that number of Warrant Shares subject to
such Cashless Exercise multiplied by a fraction, the numerator of which
shall be the difference between the then current Market Price per share
(as hereinafter defined) of Common Stock and the Per Share Warrant Price,
and the denominator of which shall be the then current Market Price per
share of Common Stock. The then current market price per share of the
Common Stock at any date (the "MARKET PRICE") shall be deemed to be the
last sale price of the Common Stock on the business day prior to the date
of the Cashless Exercise or, in case no such reported sales take place on
such day, the average of the last reported bid and asked prices of the
Common Stock on such day, in either case on the principal national
securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the
representative closing bid price of the Common Stock as reported by the
NASDAQ Bulletin Board ("NASDAQ"), or other similar organization if NASDAQ
is no longer reporting such information, or if not so available, the fair
market price of the Common Stock as determined in good faith by the Board
of Directors.
(b) If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock and the Holder is
entitled to receive a new Warrant covering the Warrant Shares which have not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon surrender of this Warrant, the
Company will (i) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the
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Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of
any fractional share of the Common Stock to which the Holder shall be entitled,
pay to the Holder cash in an amount equal to the fair value of such fractional
share (determined in such reasonable manner as the Board of Directors of the
Company shall determine), and (ii) deliver the other securities and properties
receivable upon the exercise of this Warrant, if any, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.
2. RESERVATION OF WARRANT SHARES; LISTING. The Company agrees that,
prior to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer, except for the restrictions on sale or transfer set forth in the
Securities Act of 1933, as amended (the "Act"), and restrictions created by or
on behalf of the Holder, and free and clear of all preemptive rights and rights
of first refusal and (b) when the Company prepares and files a registration
statement covering the shares of Common Stock issued or issuable upon exercise
of this Warrant with the Securities and Exchange Commission (the "SEC") which
registration statement is declared effective by the SEC under the Act and the
Company lists its Common Stock on any national securities exchange or other
quotation system, it will use its reasonable best efforts to cause the shares of
Common Stock subject to this Warrant to be listed on such exchange or quotation
system.
3. PROTECTION AGAINST DILUTION.
(a) If, at any time or from time to time after the date of issuance
of this Warrant, the Company shall issue or distribute to the holders of shares
of Common Stock evidence of its indebtedness, any other securities of the
Company or any cash, property or other assets (excluding a subdivision,
combination or reclassification, or dividend or distribution payable in shares
of Common Stock, referred to in Subsection 3(b), and also excluding cash
dividends or cash distributions paid out of net profits legally available
therefor in the full amount thereof, which together with the value of other
dividends and distributions made substantially concurrently therewith or
pursuant to a plan which includes payment thereof, is equivalent to not more
than 5% of the Company's net worth) (any such non-excluded event being herein
called a "SPECIAL DIVIDEND"), the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price then in effect by a fraction, the
numerator of which shall be the then current Market Price of the Common Stock
less the fair market value (as determined in good faith by the Company's Board
of Directors) of the evidence of indebtedness, cash, securities or property, or
other assets issued or distributed in such Special Dividend applicable to one
share of Common Stock and the denominator of which shall be the then current
Market Price of the Common Stock. An adjustment made pursuant to this Subsection
3(a) shall become effective immediately after the record date of any such
Special Dividend.
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(b) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the Per Share Warrant Price shall be adjusted to be equal
to a fraction, the numerator of which shall be the Aggregate Warrant Price and
the denominator of which shall be the number of shares of Common Stock or other
capital stock of the Company which the Holder would have owned immediately
following such action had such Warrant been exercised immediately prior thereto.
An adjustment made pursuant to this Subsection 3(b) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(c) Except as provided in subsections 3(a) and 3(d), in case the
Company shall hereafter issue or sell any Common Stock, any securities
convertible into Common Stock or any rights, options or warrants to purchase
Common Stock or securities convertible into Common Stock, in each case for a
price per share or entitling the holders thereof to purchase Common Stock at a
price per share (determined by dividing (i) the total amount, if any, received
or receivable by the Company in consideration of the issuance or sale of such
securities plus the total consideration, if any, payable to the Company upon
exercise or conversion thereof (the "TOTAL CONSIDERATION") by (ii) the number of
additional shares of Common Stock issued, sold or issuable upon exercise or
conversion of such securities) less than the then current Market Price of the
Common Stock or the current Per Share Warrant Price in effect on the date of
such issuance or sale, the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price then in effect by a fraction, the
numerator of which shall be (x) the sum of (A) the number of shares of Common
Stock outstanding on the record date of such issuance or sale plus (B) the Total
Consideration divided by either the current Market Price of the Common Stock or
the current Per Share Warrant Price, whichever is greater, and the denominator
of which shall be (y) the number of shares of Common Stock outstanding on the
record date of such issuance or sale plus the maximum number of additional
shares of Common Stock issued, sold or issuable upon exercise or conversion of
such securities.
(d) Except as otherwise provided herein, no adjustment in the Per
Share Warrant Price shall be required in the case of the issuance by the Company
of (i) Common Stock pursuant to the exercise or conversion of any Warrant or any
other options, warrants or any convertible securities currently outstanding or
outstanding as a result of securities hereafter issued; provided, that the
exercise price or conversion price at which such securities are exercised or
converted, as the case may be, is equal to the exercise price or conversion
price in effect as of the date of this Warrant or as of the date of issuance
with respect to securities hereafter issued (except for standard anti-dilution
adjustments) and (ii) shares of Common Stock issued or sold pursuant to stock
purchase or stock option plans or other similar arrangements that are approved
by the Company's Board of Directors.
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(e) In case of any capital reorganization or reclassification, or
any consolidation or merger to which the Company is a party other than a merger
or consolidation in which the Company is the continuing corporation, or in case
of any sale or conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Warrant shall have the right thereafter to receive on the exercise of
this Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section 3 with respect to the rights and interests thereafter of
the Holder of this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. The above
provisions of this subsection 3(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. The issuer of any shares of stock or other
securities or property thereafter deliverable on the exercise of this Warrant
shall be responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassification, consolidation,
merger, statutory exchange, sale or conveyance and of said provisions so
proposed to be made, shall be mailed to the Holders of the Warrants not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(f) In case any event shall occur as to which the other provisions
of this Section 3 are not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the purchase rights represented by
this Warrant in accordance with the essential intent and principles hereof then,
in each such case, the Holders of Warrants representing the right to purchase a
majority of the Warrant Shares subject to all outstanding Warrants may appoint a
firm of independent public accountants of recognized national standing
reasonably acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the purchase rights
represented by the Warrants. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein. The fees and expenses of such independent public
accountants shall be borne by the Company.
(g) No adjustment in the Per Share Warrant Price shall be required
unless such adjustment would require an increase or decrease of at least $0.05
per share of Common Stock; provided, however, that any adjustments which by
reason of this Subsection 3(g) are not required to be made shall be carried
forward and taken into account in any subsequent
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adjustment. All calculations under this Section 3 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be. Anything in this
Section 3 to the contrary notwithstanding, the Company shall be entitled to make
such reductions in the Per Share Warrant Price, in addition to those required by
this Section 3, as it in its discretion shall deem to be advisable in order that
any stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.
(h) Whenever the Per Share Warrant Price is adjusted as provided in
this Section 3 and upon any modification of the rights of a Holder of Warrants
in accordance with this Section 3, the Chief Financial Officer of the Company
shall promptly prepare a certificate setting forth the Per Share Warrant Price
and the number of Warrant Shares after such adjustment or the effect of such
modification and a brief statement of the facts requiring such adjustment or
modification and the manner of computing the same and cause copies of such
certificate to be mailed to the Holders of the Warrants.
(i) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, the Company
shall mail notice thereof to the Holders of the Warrants not less than 15 days
prior to the record date fixed for determining stockholders entitled to
participate in such dividend or other distribution.
(j) If, as a result of an adjustment made pursuant to this Section
3, the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to the Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Per Share Warrant Price between or
among shares or such classes of capital stock or shares of Common Stock and
other capital stock.
4. REDEMPTION. At any time after JANUARY 12, 1998, this Warrant
shall be redeemable at the Company's option upon forty five (45) days notice to
the Holder, for $.01 per Warrant Share, if the closing price of the Common Stock
of the Company shall exceed three hundred percent (300%) (as reported on the
Nasdaq Small Cap Market) of the Exercise Price of this Warrant for twenty (20)
consecutive trading days ending ten (10) days prior to the date of notice of
redemption.
5. FULLY PAID STOCK; TAXES. The Company agrees that the shares of
the Common Stock represented by each and every certificate of Warrant Shares
delivered on the exercise of this Warrant be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive rights or rights of
first refusal, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common Stock
is at all times equal to or less than the then Per Share Warrant Price. The
Company further covenants and agrees that it will pay, when due and payable, any
and all
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Federal and state stamp, original issue or similar taxes which may be payable in
respect of the issue of any Warrant Share or any certificate thereof.
6. REGISTRATION UNDER SECURITIES ACT OF 1933.
(a) The shares of Common Stock underlying the Warrants (the
"Conversion Shares") shall be included in the registration statement filed in
connection with the Private Placement or, if no such registration statement is
filed or becomes effective, in the next registration statement (the
"Registration Statement") filed by the Company in which these shares can legally
be included (i.e. excluding registrations on Form S-4, S-8 or any other limited
purpose form), such Registration Statement to be completed no later that 240
days from the date of this Agreement.
(b) Until all Warrant Shares have been sold under a Registration
Statement or pursuant to Rule 144, the Company shall use its reasonable best
efforts to file with the Securities and Exchange Commission all current reports
and the information as may be necessary to enable the Holder to effect sales of
its shares in reliance upon Rule 144 promulgated under the Act.
7. LIMITED TRANSFERABILITY. This Warrant may not be sold,
transferred, assigned or hypothecated by the Holder except in compliance with
the provisions of the Act and the applicable state securities "blue sky" laws.
The Company may treat the registered Holder of this Warrant as he or it appears
on the Company's books at any time as the Holder for all purposes. The Company
shall permit any Holder of a Warrant or his duly authorized attorney, upon
written request during ordinary business hours, to inspect and copy or make
extracts from its books showing the registered holders of Warrants. All warrants
issued upon the transfer or assignment of this Warrant will be dated the same
date as this Warrant, and all rights of the holder thereof shall be identical to
those of the Holder.
8. LOSS, ETC., OF WARRANT. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
9. WARRANT HOLDER NOT SHAREHOLDER. Except as otherwise provided
herein, this Warrant does not confer upon the Holder any right to vote or to
consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
10. MODIFICATION. This Agreement may not be modified, amended or
waived in any manner except by an instrument in writing signed by Paramount
Capital Asset Management, Inc. the Investment Manager of The Aries Fund, a
Cayman Island
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Trust, and the Company. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of such party of a provision of this Agreement.
11. COMMUNICATION. No notice or other communication under this
Warrant shall be effective unless, but any notice or other communication shall
be effective and shall be deemed to have been given if, the same is in writing
and is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at 2425 North 55th Street, Boulder, CO 80301,
Attention: President or other address as the Company has designated in writing
to the Holder; or
(b) the Holder at c/o Paramount Capital Asset Management, Inc., 787
Seventh Avenue, New York, NY, 10019, Attn: Lindsay A. Rosenwald, M.D. or other
such address as the Holder has designated in writing to the Company.
12. HEADINGS. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
13. APPLICABLE LAW. This Warrant shall be governed by and construed
in accordance with the law of the State of New York without giving effect to the
principles of conflicts of law thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its President and its corporate seal to be hereunto affixed and attested by
its Secretary this 12th day of JANUARY, 1998.
XENOMETRIX, INC.
By: --------------------------------
Name:
Title: President & Chief Executive Officer
ATTEST:
- -------------------------------
Secretary
[Corporate Seal]
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SUBSCRIPTION
The undersigned, ___________________, pursuant to the provisions of
the foregoing Warrant, hereby agrees to subscribe for and purchase
____________________ shares of the Common Stock, par value $.001 per share, of
Xenometrix, Inc. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.
Dated:_______________ Signature:____________________
Address:______________________
CASHLESS EXERCISE
The undersigned ___________________, pursuant to the provisions of
the foregoing Warrant, hereby elects to exchange its Warrant for
___________________ shares of Common Stock, par value $.001 per share, of
Xenometrix, Inc. pursuant to the Cashless Exercise provisions of the Warrant.
Dated:_______________ Signature:____________________
Address:______________________
ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby sells, assigns and
transfers unto ____________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant on the books of
Xenometrix, Inc.
Dated:_______________ Signature:____________________
Address:______________________
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PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby assigns and transfers unto
____________________ the right to purchase _______ shares of the Common Stock,
par value $.001 per share, of Xenometrix, Inc. covered by the foregoing Warrant,
and a proportionate part of said Warrant and the rights evidenced thereby, and
does irrevocably constitute and appoint ____________________, attorney, to
transfer that part of said Warrant on the books of Xenometrix, Inc.
Dated:_______________ Signature:____________________
Address:______________________
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALNACE SHEET AS OF SEPTEMBER 30, 1998 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 232
<ALLOWANCES> 5
<INVENTORY> 153
<CURRENT-ASSETS> 636
<PP&E> 1,331
<DEPRECIATION> 731
<TOTAL-ASSETS> 1,703
<CURRENT-LIABILITIES> 2,721
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> (1,021)
<TOTAL-LIABILITY-AND-EQUITY> 1,703
<SALES> 33
<TOTAL-REVENUES> 333
<CGS> 38
<TOTAL-COSTS> 106
<OTHER-EXPENSES> 512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> (416)
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (416)
<EPS-PRIMARY> (0.14)
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</TABLE>
