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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-KSB
(MARK ONE)
[x] Annual Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-21994
GLYKO BIOMEDICAL LTD.
(Exact name of small business issuer as specified in its charter)
Canada 68-0230537
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
81 Digital Drive, Novato, California 94949
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (415) 382-6653
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, no par value
(Title of Class)
Check whether the 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
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III to the Form 10-KSB
or any amendment to this Form 10-KSB. ______
State issuer's revenues for its most recent fiscal year. $1,568,810.
-----------
The approximate aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of February 29, 1996 was
$3,546,857.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 14,567,944 common shares outstanding
as of February 29, 1996.
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GLYKO BIOMEDICAL LTD.
This report contains certain forward looking statements which involve
risks and uncertainties. The Company's actual results could differ
materially from the results anticipated in these forward looking
statements as a result of certain factors set forth under "Risk
Factors" and elsewhere in this report.
ITEM 1. DESCRIPTION OF BUSINESS
Glyko Biomedical Ltd. was incorporated by Certificate and Articles of
Incorporation under the laws of Canada on June 26, 1992 ("Glyko"). On December
21, 1992, simultaneously with an initial public offering of the Company's Common
Shares on The Toronto Stock Exchange, Glyko acquired 100 percent of the shares
of Glyko, Inc. a corporation incorporated under the laws of Delaware on October
15, 1990 upon an exchange of shares with the stockholders of Glyko, Inc. The
registered office of Glyko is Scotia Plaza, Suite 2100, 40 King Street West,
Toronto, Canada M5H 3C2. The registered and principal office of Glyko, Inc. is
81 Digital Drive, Novato, California. In this Statement, unless otherwise
indicated, a reference to "Glyko" or to the "Company" means Glyko and its
wholly-owned subsidiary, Glyko, Inc.
Glyko, Inc. was established in 1990 under a joint venture agreement, ("the Joint
Venture Agreement"), dated December 18, 1990 among Millipore Corporation
("Millipore"), Glycomed Incorporated ("Glycomed"), Gwynn R. Williams
("Williams"), and John C. Klock, M.D. (collectively, the "Founders"), Astroscan,
Ltd. and Astromed, Ltd., corporations controlled by Williams, and Glyko, Inc. to
conduct original scientific research aimed at developing novel analytic and
research instrumentation for carbohydrate research and for human medical
diagnosis. The Company's principal activities are the sale of chemical kits and
equipment incorporating its proprietary carbohydrate technology and the
development of commercial applications based on complex carbohydrates.
The Company is developing new techniques to analyze and manipulate carbohydrates
for research and diagnostic purposes. As its major asset is a scientifically
enabling core technology rather than a single narrow technique or molecule, the
Company may develop business opportunities in multiple areas such as research
laboratory instrumentation, human diagnostics, and the pharmaceutical industry,
although there can be no assurance that the Company will successfully develop
any of such business opportunities. The Company's scientific and business
strategies are based on its core patented technologies. The Company has
developed and marketed a product line of laboratory instrumentation and chemical
kits, referred to as analytic products, which are used in carbohydrate
detection, separation, and sequencing. The general purpose of these products is
to determine the composition and sequential linkage conformations of sugar
molecules from biologic or synthetic materials. The basic technology utilized by
the Company is called "FACE(R)" or
Fluorophore-Assisted-Carbohydrate-Electrophoresis.
In November 1995, the Company received approval from the United States Food and
Drug Administration to market its first diagnostic product, the Urinary
Carbohydrate Analysis Test Kit. The Company has completed certain internal
preliminary studies to demonstrate the utility of its instrumentation to
diagnose certain medical conditions associated with carbohydrate abnormalities.
These conditions include, among others, mental and developmental retardation in
children and cardiovascular diseases in adults. As of December 31, 1995 the
Company had 18 employees including five Ph.D.s/M.D.s with specialized training
in carbohydrate biotechnology.
ANALYTIC PRODUCTS
The Company manufactures a complete system for the analysis of carbohydrates.
The system consists of:
- - A series of kits for performing analyses of different types of
carbohydrates. Each kit includes all the chemicals, enzymes, pre-cast
gels, and standards for performing a specific analysis.
- - A cooled electrophoresis system for performing high-quality analysis of
the research sample.
- - A computer-controlled charged coupling device ("CCD") camera system
incorporating a CCD camera for low light level imaging of the research
sample.
- - Copyrighted, proprietary software for image analysis and data
manipulation.
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The Company believes the system has the advantages of low cost, ease of use,
high sensitivity and applicability to a broad range of carbohydrate problems.
Types of applications include the confirmation that genetically engineered
products, for example monoclonal antibodies and biotechnology pharmaceuticals,
have their required carbohydrates. Other applications include determining the
specific carbohydrate structure on a cell or in a food product. The system is
also useful for a broad range of problems from plant research to biotechnology
to industrial production. The FACE(R) system has been adapted to be used in
capillary electrophoresis, making it available to a broader set of users.
In collaboration with its former marketing partner for analytic products,
Millipore, the Company began to actively market its analytic products on October
1, 1992. Since April 1994 the Company has been solely responsible for the
marketing and distribution of its products directly and through authorized
distributors.
THE ANALYTIC PRODUCTS MARKET
The Company estimates that the market for the Company's analytic products
addresses the needs of a broad range of scientists such as biologists,
biochemists and molecular biologists. The Company's customers include university
research laboratories, biotechnology companies and pharmaceutical companies.
DIAGNOSTIC PRODUCTS
BACKGROUND
Currently, there are very few carbohydrate diagnostics tests. They include
glucose monitoring for diabetics, certain blood typing tests and the measurement
of certain carbohydrates in the blood of persons with cancer. The Company
believes the development of carbohydrate diagnostic products has been limited by
the lack of appropriate analytical systems. The Company's FACE(R) diagnostic
technology should give clinicians the capability to detect the presence of
specific carbohydrate markers indicating certain disease states.
In November 1995, the Company received approval from the United States Food and
Drug Administration to market its diagnostic test for Lysosomal Storage
Diseases, the Urinary Carbohydrate Analysis Test Kit. The Company believes that
its technology has potential for further diagnostic applications. The Company
has successfully completed certain studies with others on small numbers of human
clinical samples to assure itself of the applicability of its core technology to
the analysis of human body fluids for certain medical diagnostic purposes.
Furthermore, to show the flexibility of the technology such studies have been
done on human samples which are from several broad diagnostic categories:
congenital and inborn metabolic diseases, therapeutic drug monitoring and
acquired conditions of adults.
The leading diagnostic objectives for the Company are:
- - To successfully market the Urinary Carbohydrate Analysis Test Kit.
- - To develop a drug monitoring technology for thrombosis treatment by
carbohydrate drugs such as heparin.
- - To develop diagnostic screening tests for osteoporosis.
The Company's efforts towards meeting these objectives may be limited by the
availability, or lack thereof, of additional funding. See "Risk Factors - Future
Capital Requirements - Uncertainty of Future Funding." Depending on available
funding, the Company may begin research in other key research areas, although
there is no assurance that it will be able to do so. There can be no assurance
that any of the Company's current or future products will be successfully
developed, prove to be effective in clinical trials, receive required regulatory
approvals or be successfully marketed. See "Risk Factors Diagnostic Products."
Lysosomal storage diseases
Lysosomal storage diseases are a class of inherited metabolic diseases. There
are at least 25 different individual diseases, including Tay-Sachs disease,
Gaucher's disease and lesser known classes such as the mucopolysaccharidoses.
Currently, only a small fraction of patients are tested for these diseases,
usually those in high-risk groups (i.e. Ashkenazi Jews for Tay-Sachs disease) or
those with clinical symptoms such as physical deformity or mental retardation.
In November 1995, The Company received approval from the United States Food and
Drug Administration to market its Urinary Carbohydrate Analysis Test Kit. This
Test is capable of detecting more than two dozen conditions in the LSD group.
The Company is planning to market the test kit to pediatricians as a primary
screening test for the majority of LSDs.
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Thrombosis
Heparin, a major anticoagulant drug, is a complex carbohydrate. Although there
are many drugs used to treat thromboses, there is only one anticoagulant
currently available for acute treatment: heparin. The Company believes there is
currently no satisfactory direct analytic method for measuring heparin which is
approved for use. A test that would accurately measure serum levels of heparin
would enable physicians to more directly measure the effectiveness and potential
toxicity of the drug. The Company has used FACE(R) to develop methods which
could be used to measure the levels of heparin in the blood of patients, in
order to better manage the heparinization process. Monitoring patients during
heparinization is crucial because at doses too low the drug is not effective,
but at doses too high there is a serious risk of bleeding. Currently, the only
approved method to monitor the use of heparin is to perform blood clotting time
assays. Such tests give only an indirect indication of the total levels of
heparin in the blood. The Company's pilot studies in testing for heparin need to
be followed by clinical studies using the heparin FACE(R) test on hospitalized
patients on heparin. There is no assurance that such testing studies will be
successful.
Osteoporosis
A test that would accurately measure the breakdown of bone would enable
physicians to more directly measure the metabolic state of patients as well as
the effectiveness of treatments. Glyko has used FACE(R) to develop a way to
measure the levels of carbohydrates in the urine of patients with osteoporosis.
Our preliminary work shows that FACE(R)can reliably measure these carbohydrates
which appear in a characteristic pattern in urine tests.
Monitoring patients during treatment is important to assess their response to a
particular type of treatment. Currently, the most common way to monitor these
patients is using quantitative X-ray densitometry, which measures bone density.
While these tests are reasonably accurate at measuring bone density, a long
period of time is required to see such changes. A test that could measure the
rate of breakdown and build-up of would be a major step forward in the
management of these patients.
In pilot studies performed by the Company patient samples from persons with
osteoporosis have been examined using FACE(R) technology. The Company feels that
on the basis of these pilot studies there is enough promise to evaluate an
additional several hundred patients in expanded pilot studies. Such studies will
require funding and the Company may seek a partner to share the cost of such
studies.
COMPETITION
Carbohydrate biotechnology is a new and rapidly evolving field. Rapid
technological development could result in the Company's potential products or
services becoming obsolete before the Company recovers its research and
development and capital expenditures.
The Company will experience competition both from analytic instrument companies
as well as from diagnostic or pharmaceutical companies which have other ways to
analyze carbohydrates. Currently, the Company faces competition from
manufacturers of chromatography and electrophoresis equipment and from suppliers
of carbohydrate enzymes and reagents. Equipment manufacturers include Dionex,
Oxford GlycoSciences, Beckman Instruments, Applied Biosystems, Bio-Rad and
others. Suppliers of carbohydrate enzymes and reagents include Genzyme,
Boehringer-Mannheim Chemicals, New England Biolabs, Seikagaku, and others.
The Company's diagnostic products may face competition from major diagnostic
companies such as Abbott, Bayer, Boehringer-Mannheim, Beckman and others. The
Company's competitors, particularly those which are large medical and
pharmaceutical companies, have substantially greater financial, manufacturing,
marketing, and technical resources than the Company. The Company believes that
the relative speed with which others can develop products, complete clinical
testing and regulatory approval processes and supply commercial quantities to
the market will be important competitive factors.
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PATENTS AND TRADE SECRETS
The Company has or has licensed a number of issued patents covering its core
technologies as well as a number of pending patent applications in the field.
Twenty of the Company's patents have been granted in the U.S., U.K. and the
European Common Market. These patents are either the Company's own patents or
are licensed exclusively in perpetuity on a royalty-free basis to the Company
under agreements with the holders of the patents. The Company's diagnostic
patent was issued in the U.S. on April 27, 1993. The claims in these patents are
intentionally broad and include multiple uses of the basic inventions. The
Company has filed an additional 16 patent applications.
GOVERNMENT REGULATION
The manufacture and sale of analytic products do not require government approval
in the United States or Canada. The manufacture and sale of medical diagnostic
products in the United States are controlled by the Federal Drug Administration
("FDA"), and the manufacture and sale of analytic products in Canada are
controlled by the Health Protection Branch ("HPB"). The laws of each country
require the licensing of manufacturing facilities located in its jurisdiction,
and carefully controlled clinical trials in humans and extensive testing of
products. The manufacturer must establish the safety and efficacy of its
products, good manufacturing practices and control over marketing activities
before it will be allowed to market and sell its products. The safety and
efficacy of a new diagnostic product must be demonstrated through clinical
trials carried out under procedures acceptable to the FDA or the HPB, as the
case may be.
In order to be able to market and sell its diagnostic products, the Company must
successfully complete clinical trials. The sales program is initiated by
applying to the FDA or the HPB, as the case may be, for permission to
manufacture and market products. The Company must submit specific information on
the results of carefully controlled clinical trials using blood or other
specimens obtained from humans. These results must show a high degree of
"sensitivity" and "specificity" for the test; that is the product must identify
with a high degree of certainty (usually over 95 percent) a given medical
condition (a high degree of specificity) using a small amount of sample to
identify a very small amount of the diagnostic marker substance in the human
sample (a high degree of sensitivity).
In addition, since the method of manufacture may affect the efficacy and safety
of the product, information on manufacturing methods and standards, and the
stability of the product components must be presented to enable the regulatory
agency to conclude that the product that may eventually be sold to the public
has the same composition and performance as that determined to be effective in
clinical trials. Production methods and quality control procedures must be in
place to ensure a consistent, well-performing product which is uniform with
respect to all quality aspects.
The controls on a new diagnostic product do not cease once it is on the market.
A new diagnostic product may be sold in the marketplace on condition that
continued reporting of its performance be submitted by the manufacturer to the
FDA or the HPB, as the case may be. The manufacturer must further inform the
regulatory agency of any new information received concerning the product's
performance or safety. If the regulatory agency determines that the product is
no longer performing to the determined standards, the product may be removed
from the market.
The regulatory process described above can be modified by the FDA or the HPB or
by legislation at any time in specific situations. Compliance can take several
years and require substantial expenditures. The FDA has permitted certain
investigational tests to be made available outside of clinical trials on an
"exemption" basis. The Company is unable to predict whether these or similar
future regulatory developments will affect the Company's products under
development. See "Description of Business - Risk Factors."
The Company is also subject to regulation in California under the Occupational
Safety and Health Act, the Environmental Protection Act, The Toxic Substances
Control Act, The Resource Conservation and Recovery Act and other present and
future federal, state or local regulations. Regulations concerning biotechnology
may also affect the Company's R&D programs. The Company believes that its
efforts to comply with these laws have had no adverse impact on its capital
expenditures, results of operations or competitive position, but there can be no
assurance that this situation will continue.
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RISK FACTORS
FUTURE CAPITAL REQUIREMENTS - UNCERTAINTY OF FUTURE FUNDING
The Company believes that its available cash will allow it to fund planned
operations through the second quarter of 1996. The Company's Report of
Independent Public Accountants for the year ended December 31, 1995 contains a
going concern qualification reflecting both the necessity and the uncertainty of
future funding. Such funding may come individually or collectively from equity
or debt placements, licensing and marketing agreements or by collaborative
research agreements with strategic partners. Additional funds may be raised
through the issuance of securities or other financing arrangements on terms and
at prices that might have the effect of diluting the holdings of then existing
stockholders. No assurance can be given that additional financing will be
available or, if available, that it will be on terms acceptable to the Company
or its stockholders. If adequate funding is not obtained, operations will be
materially adversely affected. The Company will delay or eliminate expenditures
in respect of certain products under development such as additional analytical
kits and diagnostic tests in the event sufficient funding is unavailable. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources".
HISTORY OF OPERATING LOSSES - UNCERTAINTY OF FUTURE PROFITABILITY
The Company commenced its research activities in December 1990 and first
recorded revenues in December 1992. While sales increased in 1994 and 1995, the
Company has not yet made a net annual operating profit. There is no assurance
that sales will increase in future quarters. The accumulated deficit as of
December 31, 1995 was approximately $11.4 million. The Company anticipates that
operating losses will continue at least through 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
DIAGNOSTIC PRODUCTS - NO PRIOR COMMERCIAL MANUFACTURING OR MARKETING
The Company has recently begun to market its first diagnostic product, the
Urinary Carbohydrate Analysis Kit. In order to manufacture its diagnostic
products in commercial quantities and to market products independently, the
Company will need to expand its production and marketing capabilities and/or
establish arrangements with third parties having the capacity for such
manufacturing or marketing. Anticipated operating revenues and cash resources
will not be sufficient to expand manufacturing and marketing capabilities for
diagnostic products currently under development. There can be no assurance that
the Company will be able to successfully market or manufacture its diagnostic
products. To the extent that the Company arranges with third parties to
manufacture or market any diagnostic products, the commercial success of such
products may depend upon the efforts of those third parties. See "Description of
Business -- Business of the Company."
EARLY STAGE OF DIAGNOSTIC PRODUCT DEVELOPMENT
Only one of the Company's diagnostic products has been approved for commercial
sale, the Urinary Carbohydrate Analysis Kit. See "Diagnostic Products -
Lysosomal Storage Diseases". Potential products currently under development by
the Company will require significant additional development, and some must
undergo several phases of clinical testing and will likely require significant
further investment prior to their final commercialization. See "Government
Regulation." Anticipated operating revenues and cash resources will not be
sufficient to facilitate significant further development of diagnostic products.
There can be no assurance that any of the Company's products under development,
either now or in the future, will be successfully developed, prove to be
effective in clinical trials, receive required regulatory approvals, be capable
of being produced in commercial quantities at reasonable costs, or be
successfully marketed. See "Description of Business -- Business of the Company."
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TECHNOLOGY AND COMPETITION
The primary competitive factors in biotechnology are the ability to create and
maintain scientifically advanced technology, to attract and maintain personnel,
and to have available adequate financial resources to maintain the Company
through its research, development and commercialization of technology stages.
The technology on which the Company's business is based uses laboratory methods
of electrophoresis and bioseparation. Nevertheless there is a technical risk
associated with reducing-to-practice the basic technology for new applications.
There is no assurance that the Company will be able to develop an economical or
practical way to separate human materials for clinical diagnosis, or that it
will be able to devise specific reagents required to obtain a needed reaction.
Other companies may develop basic carbohydrate technology which directly
competes for the carbohydrate diagnostic market. Furthermore, conventional
diagnostic technology (such as enzyme or radioactive immunoassay) may accomplish
new breakthroughs in analyzing carbohydrates (which so far has been difficult).
Additionally, other newer technologies such as nucleic acid hybridization may
become competitive and erode the Company's potential shares of diagnostic
markets.
Competition in bioinstrumentation is intense. Many companies, universities, and
research organizations are engaged in the research and development of products
in the areas being developed by the Company. Many of these have financial,
technical, manufacturing and marketing resources greater than those of the
Company. Several major research instrument companies have undertaken recently to
establish capabilities in carbohydrate technology and may apply such technology
for essentially the same purpose as the Company. As a result carbohydrate
technology will become an area of more intense competition. In order to compete
successfully the Company must expand its efforts to develop new products and
uses for its current products in research and diagnosis. There can be no
assurance that the Company will be able to do so effectively.
PATENTS AND PROPRIETARY TECHNOLOGY
The Company's success will depend in part on its ability to obtain patents,
protect trade secrets and not infringe the patents of others. The Company has
been issued patents as well as filed applications for U.S. and foreign patents
and has exclusive licenses to patents or patent applications of others. The
Company intends in the future to apply for patents in various jurisdictions for
inventions forming part of its technology. No assurance can be given that patent
applications will result in the issue of patents or that, if issued, patents
obtained by the Company will confer on the Company a preferred position with
respect to the technology or products claimed. See "Description of Business --
Patents and Trade Secrets."
There can be no assurance that others will not independently develop products
similar to the Company's, duplicate the Company's products or design around the
Company's patents. In addition the Company may be required to obtain licenses to
others' patents. No assurance can be given that such licenses can be obtained on
terms acceptable to the Company. These factors could cause the Company to
encounter delays in product market introductions or adversely affect the
Company's development or sale of products requiring licenses from third parties.
The Company's products and technologies could be subject to claims of
infringement by others. Patent conflicts and litigation can be expensive, and
could have a material adverse effect on the Company's results of operations.
PRODUCT LIABILITY AND LACK OF INSURANCE
The Company is subject to the risk of exposure to product liability claims in
the event that the use of its technology results in adverse effects during
testing or commercial sale. The Company currently does not maintain product
liability insurance. There can be no assurance that the Company will be able to
obtain product liability insurance coverage at economically reasonable rates, or
that such insurance will provide adequate coverage against all possible claims.
UNCERTAINTY OF REGULATORY APPROVAL
The Company's diagnostics products will require regulatory approval by
government agencies. This includes pre-clinical and clinical testing and
approval processes in the U.S. and other countries. Compliance can take several
years and require substantial expenditures. There can be no assurance that
difficulties or excessive costs will not be encountered by the Company in this
process or that required approvals will be obtained. The Company will not be
able to market its diagnostic products until required approvals have been
obtained. See "Description of Business -- Government Regulation."
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DEPENDENCE ON KEY PERSONNEL
The Company's success will depend in large part upon its ability to attract and
retain highly qualified scientific and management personnel. The Company faces
competition for such personnel from other companies, academic institutions,
government entities and other organizations. The Company depends on its key
management, including John Klock, John Dorson, and Christopher Starr, and the
departure of any of such persons could have a material adverse effect on the
Company. The Company maintains key person life insurance on Dr. Klock.
EMPLOYEES
At February 29, 1996 the Company had 17 employees. All employees were full time
and 15 employees worked in Novato, California.
ITEM 2. DESCRIPTION OF PROPERTY
The Company occupies a 25,000 square foot facility in Novato, California. The
facility includes 9,000 square feet of laboratory space, an 8,000 square foot
manufacturing facility, and 8,000 square feet of expansion space. The Company
has agreed with Millipore to sublease the facility until 1998. Minimum lease
payments under the sublease in 1996 are $240,720 and increase in each year of
the term to $263,664 in 1998. These obligations were established based on market
rates at the time sublease terms were negotiated. The Company believes that its
facility is adequate to meet its current and reasonably foreseeable requirements
for the conduct of its business, including manufacture of analytic products. See
"Certain Relationships and Related Transactions."
ITEM 3. LEGAL PROCEEDINGS.
As of February 29, 1996, to the best of the Company's knowledge, there were no
pending legal proceedings against the Company or its property.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of November 1993, the Company's stock has been listed on the NASD Electronic
Bulletin Board under the symbol "GLYK". The Company's Common Shares have been
listed and traded on The Toronto Stock Exchange since December 21, 1992 under
the symbol "GBL." The following table sets forth the high and low sales prices
for the Common Shares for the periods noted, as reported by The Toronto Stock
Exchange.
<TABLE>
<CAPTION>
PRICES
(IN CANADIAN DOLLARS)
Year PERIOD HIGH LOW
---- ------ ---- ---
<S> <C> <C> <C>
1993 Fourth Quarter $3.25 $2.60
1994 First Quarter $2.80 $1.40
1994 Second Quarter $1.50 $0.90
1994 Third Quarter $1.00 $0.80
1994 Fourth Quarter $1.00 $0.60
1995 First Quarter $1.00 $0.72
1995 Second Quarter $1.00 $0.80
1995 Third Quarter $0.90 $0.79
1995 Fourth Quarter $1.15 $0.60
</TABLE>
References herein to the market price of the Common Share refers to the closing
price on The Toronto Stock Exchange.
HOLDERS
As of February 29, 1996, there were 161 holders of record of 14,567,944
outstanding Common Shares of the Company.
OUTSTANDING OPTIONS
As of February 29, 1996, options to acquire 2,204,879 of the Company's Common
Shares had been granted and were outstanding.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax
considerations generally applicable to a person (a "United States holder") who,
for the purposes of the Income Tax Act (Canada) (the "Canadian Tax Act") and the
Convention between Canada and the United States with respect to Taxes on Income
and Capital (the "Convention") and at all relevant times, is resident in the
United States and not resident in Canada, deals at arm's length with the
Company, holds Common Shares as capital property and does not use or hold and is
not deemed to use or hold the Common Shares in carrying on business in Canada.
Special rules, which are not discussed in this summary, may apply to a United
States holder that is an insurer that carries on an insurance business in Canada
and elsewhere.
This summary is based on the current provisions of the Convention and of the
Canadian Tax Act and the regulations thereunder, all specific proposals to amend
the Canadian Tax Act and the regulations announced by the Minister of Finance
(Canada) prior to the date hereof (the "Proposed Amendments") and the published
administrative practices of Revenue Canada, Taxation. This summary assumes the
Proposed Amendments will be enacted in the form currently proposed. This summary
does not take into account or anticipate any changes in the governing law, other
than the Proposed Amendments, whether by federal, governmental or legislative
decision or action, nor does it take into account the tax legislation or
considerations of any province, territory or foreign jurisdiction.
This summary is of a general nature only and is not, and should not be
interpreted as, legal or tax advice to any particular United States holder and
no representation is made with respect to the Canadian income tax consequences
to any particular person. Accordingly, United States holders are advised to
consult their own tax advisors with respect to their particular circumstances.
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Under the Canadian Tax Act and pursuant to the Convention, Canadian withholding
tax will apply to dividends on Common Shares paid or deemed to be paid to a
United States holder at the rate of 15 percent of the gross amount of such
dividends, or, in the case of a United States holder that is a corporation which
owns at least 10 percent of the voting stock of the company, six percent of the
gross amount of such dividends paid in 1996 and five percent of the gross
dividends paid thereafter.
In general, a United States holder will not be subject to Canadian income tax on
capital gains arising on the disposition of Common Shares unless (i) at any time
in the five-year period immediately preceding the disposition, 25 percent or
more of the issued shares of any class or series of the Company belonged to the
United States holder, to persons with whom the United States holder did not deal
at arm's length, or to the United States holder and persons with whom he did not
deal at arm's length, and (ii) the value of the Common Shares at the time of the
disposition is derived principally from real property (as defined in the
Convention) situated in Canada.
A disposition of Common Shares to the Company (unless the Company acquires the
shares in the open market in the manner in which shares would normally be
purchased by any member of the public) will result in a deemed dividend to the
United States holder equal to the amount by which the consideration paid by the
Company to acquire the Common Shares exceeds the paid-up capital of such shares
for purposes of the Canadian Tax Act. The amount of such deemed dividend will be
subject to the withholding tax described above.
DIVIDEND POLICY
Glyko does not anticipate the payment of dividends in the foreseeable future. At
present, Glyko's policy is to retain earnings, if any, to finance the
development of its business. The payment of dividends in the future will depend
upon, among other factors, Glyko's earnings, capital requirements and operating
and financial condition.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion and analysis of financial condition and results of
operations contains certain forward looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward looking statements.
Glyko Biomedical Ltd. is a Canadian company which holds all of the capital stock
of Glyko, Inc. The following discussion and the accompanying consolidated
financial statements include the accounts of Glyko Biomedical Ltd. and Glyko,
Inc. presented on a consolidated basis. Since its inception in October 1990,
Glyko has been engaged in the research and development of new techniques to
analyze and manipulate carbohydrates for research, diagnostic and pharmaceutical
purposes. The Company has developed a line of analytic instrumentation
laboratory products which include an imaging system, analysis software and
chemical analysis kits. During 1992, the Company completed the development and
final testing of these products and, in December 1992, began its first
commercial shipments of its analytic products in conjunction with its marketing
partner, Millipore Corporation. From that time until April 1994 the Company sold
its products directly to customers and indirectly through sales to Millipore for
resale. In April, 1994, the Company and Millipore agreed to terminate their
marketing agreement and the Company retained sole marketing rights to its
products. The Company is continuing to develop additional chemical kits for use
with the imaging system, and is also developing a line of carbohydrate
diagnostic products. In November 1995, the Company received approval from the
United States Food and Drug Administration to market its first diagnostic
product, the Urinary Carbohydrate Analysis Test Kit. The Company has incurred a
net loss in each period since its inception and expects to continue to incur
losses at least through 1996. For the period from its inception to December 31,
1995, the Company has incurred cumulative losses of $11,358,000.
RESULTS OF OPERATIONS
Revenues in 1995 were $1,569,000 and consisted primarily of sales of imaging
equipment, sales of chemical analysis kits, licensing and grant fee revenues and
custom analytical service fee revenues. Sales of imaging systems were
responsible for slightly less than half of total revenue in 1995. Revenues for
1994 were $883,000 and consisted primarily of sales of imaging equipment and
chemical analysis kits. Sales of imaging systems were responsible for over half
of total revenue in 1994. Remaining 1994 revenues were due primarily to sales of
chemical analysis kits. Revenues from licensing fees, grant fees and custom
analytical services were nominal in 1994.
The increase in revenues in 1995 was primarily due to sales of imaging systems
to distributors for resale and from licensing fees earned from distributors.
Sales volumes of chemical analysis kits were higher in 1995 and custom
analytical service revenue was also higher in 1995. Selling prices in 1995 for
all products were slightly higher than in 1994.
Gross margin was 67 percent in 1995 and 64 percent in 1994. As the Company is in
the early stages of product sales and production, management expects that
margins will fluctuate for some time and that current margins are not
necessarily indicative of future margins. Non-product sale revenue such as
licensing fees and grant fees will affect future margins.
Research and development expenses in 1995 were $1,063,000 compared to $1,230,000
in 1994, a decrease of $167,000. The decrease in departmental expense
principally resulted from reduced staffing levels in 1995. Also in 1995,
research and development staff spent more time performing custom analytical
service work resulting in higher charges of research and development cost to
cost of products and services.
Selling, general and administrative expense was $1,662,000 in 1995, a decrease
of $161,000 from 1994 expense of $1,823,000. The principal reason for the
decrease in expense in 1995 was the 1994 third quarter charge of $220,000
arising from the pending issuance of 500,000 shares to Millipore Corporation in
exchange for their agreement to relinquish their marketing rights to Glyko
products. Apart from that one-time charge, 1995 total selling, general and
administrative expenses were approximately equal to 1994 expenses. Payroll and
travel costs were higher in 1995, primarily due to increased sales staffing
levels. Consultancy expense was higher in 1995 due to increased marketing
consultancy costs as well as consultancy fees for regulatory agency and public
relations matters. Media advertising placements were lower in 1995, resulting in
reduced advertising expense. Legal and other costs associated with financing
efforts were also lower in 1995 reflecting the successful completion of the
Company's private equity placement in the second quarter of 1995.
10
<PAGE> 12
Interest income earned in 1995 and 1994 reflected earnings on cash proceeds from
the public offering completed late in 1992 and the private equity placement
offering completed in the second quarter of 1995. Interest expense in 1995 and
1994 was due to accrued interest on a stockholder bridge loan and interest
expense on a capital lease.
LIQUIDITY AND CAPITAL RESOURCES
In the second quarter of 1995, the Company closed a private equity placement
offering (the Financing). Investors participating in the Financing purchased
units which consisted of one share of common stock and one warrant to purchase
one share of common stock. The Company issued units in exchange for cash, and
also in exchange for the settlement of certain outstanding liabilities. The
units were priced at C$0.80 with an exercise price on the warrant of C$0.90. The
Financing raised approximately $2.78 million, consisting of approximately $2.36
million in cash and $420,000 for the settlement of a stockholder/director bridge
loan, common stock issued for financing services and certain other liabilities.
The Company's net cash position increased by $541,000 in 1995. Cash proceeds
from the Financing were offset by cash used in operating activities of
$1,699,000. Cash used in operating activities in 1995 reflected the operating
loss of $1,649,000. The cash effect of payments of deferred liabilities upon
completion of the private equity placement offering was offset by the receipt,
in the fourth quarter, of an advance upon future sales received from a foreign
distributor. Capital expenditures in 1995 were not material.
Cash used by operations in 1994 was $1,867,000. The effect upon cash of the net
loss of $2,476,000 was partially offset by deferral of payments to Millipore for
facilities charges and by non-cash depreciation charges. In the fourth quarter
of 1994 the Company received a total of $250,000 in convertible bridge loans
from a stockholder. During 1994, the Company made arrangements with certain
vendors and creditors to defer payments on accounts payable of approximately
$108,000. The Company deferred payment of portions of officers' salaries in 1994
pending the successful completion of equity financing efforts. The effect of
these arrangements was to reduce the net consumption of cash in 1994. Capital
expenditures in 1994 were not material.
The Company believes that its available cash will allow it to fund planned
operations through the second quarter of 1996. To maintain liquidity in 1996,
the Company must realize a significant increase in sales, receive additional
funding or significantly reduce expenditures. There can be no assurance that
sales will increase significantly in 1996. Funding may come individually or
collectively from equity or debt placements, licensing and marketing agreements
or by collaborative research agreements with strategic partners. The Company
will seek additional funding through all available means, including but not
limited to the methods noted above. However there can be no assurance that such
funding will be obtained, or that funding will be available on terms acceptable
to the Company or its stockholders. The Company's Report of Independent Public
Accountants for the year ended December 31, 1995 contains a going concern
qualification reflecting both the necessity and the uncertainty of future
funding. See "Risk Factors - Future Capital Requirements."
In 1996, management expects spending to remain consistent with 1995 levels. The
availability, or lack thereof, of additional funding will influence spending for
research and development. To the extent that such funding is not available,
research and development spending will be reduced. The Company has no
commitments to make any significant capital expenditures. In the event that the
Company enters into collaborative research arrangements, spending levels will
increase to conduct such funded research. The distribution of such spending will
be influenced by scientific progress in the analytical and diagnostic fields, as
well as in clinical trials.
ITEM 7. FINANCIAL STATEMENTS
The information required to be filed in this item appears on pages F-2 to F-12
and is incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
11
<PAGE> 13
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the company are as follows:
<TABLE>
<CAPTION>
YEAR
JOINED
NAME AGE POSITION COMPANY
---- --- -------- -------
<S> <C> <C> <C>
R. William Anderson(1)(2) 54 Director 1991
John H. Craig 48 Secretary and Director 1992
John Dorson, Ph.D. 51 Vice-President and General Manager,
Analytic Business unit 1994
John S. Glass 59 Director 1994
John F. Hamilton 51 Vice-President, Finance and Administration 1992
and Chief Financial Officer
John C. Klock, M.D. (1) 51 President, Chief Executive Officer and 1990
Director
Christopher M. Starr, Ph.D. 43 Vice-President, Research and Development 1991
F. Michael P. Warren, Q.C. (2) 60 Director 1992
Gwynn R. Williams(1) 62 Director 1990
</TABLE>
(1) Member of Audit Committee
(2) Member of Compensation Committee
All directors hold office until the next annual meeting of stockholders or until
their successors are elected and qualified. Officers are appointed by the Board
of Directors and serve at the discretion of the Board. There are no family
relationships among the officers and directors of the Company.
MR. R. WILLIAM ANDERSON has served as a Director since 1992 and is an
independent consultant. From 1989 to 1994 he served as Vice-President-Finance
and Chief Financial Officer at Glycomed Incorporated. From July 1985 to April
1989 he served as Vice President of Finance and Administration and Chief
Financial Officer for Chiron Corporation, a biotechnology company. Prior to
Chiron, Mr. Anderson was Controller and Director of Financial Planning and
Analysis at Syntex Laboratories, Inc., the domestic pharmaceutical subsidiary of
Syntex Corporation. Mr. Anderson holds an MBA from the Harvard Business School.
MR. JOHN H. CRAIG has served as a Director and Secretary of the Corporation
since 1992 and has been a solicitor and partner with Cassels Brock and Blackwell
and previously with Holden Day Wilson, Toronto law firms, since 1973. Mr. Craig
is a director of a number of public companies listed on the Toronto Stock
Exchange.
DR. JOHN DORSON joined the Company in March, 1994 as Vice-President and General
Manager of the analytic business unit. Prior to joining Glyko, Dr. Dorson was
Vice President, Planning and Business Development for Miles Diagnostics
Inc./Technicon (1988-1993) and Director of Marketing for Olympus Clinical
Instruments (1985-1988). Dr. Dorson has sixteen years experience in sales,
marketing and strategic planning in the medical field. He received his Ph.D. in
biochemistry in 1973 from the University of Kentucky and was a Post Doctoral
Fellow at Baylor College of Medicine (1973).
MR. JOHN S. GLASS has served as a Director since August 1994 and is Vice
President and Chief Financial Officer of Milkhaus Laboratory, Inc., a clinical
stage biopharmaceutical company. In 1995 he was an independent consultant. From
1968 to 1994 he served in various capacities at Millipore Corporation, most
recently as Director of Investor Relations and Vice President of Millicorp, a
venture capital subsidiary. Previously Mr. Glass was a research and development
manager at Polaroid Corporation. Mr. Glass holds a Masters degree in management
from the Massachusetts Institute of Technology.
12
<PAGE> 14
MR. JOHN F. HAMILTON was formerly President and Chief Financial Officer of
Protos Corporation (1988-1992) (a drug design subsidiary of Chiron Corporation)
and Treasurer of Chiron Corporation, a biotechnology company (1987-1992).
Previously he was Treasurer and Vice-President at American Hawaiian Cruises, a
U.S. based cruise line (1985-1987). Additionally, he has 17 years of
international banking experience.
DR. JOHN C. KLOCK was formerly an academic physician and carbohydrate researcher
at the University of California at San Francisco (1976-1981), Scientific
Director of the Institute of Cancer Research of California Pacific Medical
Center in San Francisco (1982-1986), a research director at Murex Corporation, a
diagnostic pharmaceutical company (1985-1986) and the scientific founder of
Glycomed Incorporated, a therapeutic company based on complex carbohydrate
technology (1986-1990).
DR. CHRISTOPHER M. STARR has been Vice President-Research and Development of the
Company since 1991. He received his Ph.D. in Biochemistry from the State
University of New York, Upstate Medical Center (Syracuse) and did post-doctoral
work at the National Institutes of Health (1987-1991). He is a carbohydrate
biochemist and molecular biologist.
MR. F. MICHAEL P. WARREN, Q.C., the founder of International Murex Technologies
Corporation (IMTC), has served as a director of IMTC since June 28, 1989 and
became Chairman of the Board on April 17, 1990. He has been Chairman and Chief
Executive Officer of Murex Diagnostics Limited (formerly Wellcome Diagnostics)
since February 1992. He has been a director of Murex Corporation since January
1989. Mr. Warren was a partner of the firm of Owen, Bird, Barristers and
Solicitors, Vancouver, British Columbia from 1970 to January 31, 1992 and
continues to be of counsel to that firm.
MR. GWYNN R. WILLIAMS is a founder of Glyko (established 1990). He is also
founder and owner of Astromed and Astroscan, UK manufacturers of scientific
equipment established in 1984. Mr. Williams was a partner in Arthur Andersen &
Co., (1971-1982). Previously he was a mathematician with General Motors Research
in Detroit (1961-1970) and with British Steel (1958-1960).
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and directors,
as well as persons who own ten percent or more of a registered class of the
Company's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company Officers, directors and ten percent or more stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company or written representations that no other reports were
required, during the fiscal year ended December 31, 1995, all officers,
directors, and ten percent stockholders complied with all Section 16(a) filing
requirements except that the Forms 5 for all officers, directors, and 10 percent
stockholders were filed late.
13
<PAGE> 15
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation that was awarded to,
earned by or paid to the Company's Chief Executive officer and the other most
highly compensated officers other than the Chief Executive Officer who earned
more than $100,000 and who were serving as executive officers as of the end of
the fiscal years ended December 31, 1995 and 1994, (together, "the Named
Officers"). No other executive officer of the Company earned more than $100,000
during the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY OPTION GRANTS
--------------------------- ---- ------ -------------
<S> <C> <C> <C>
John C. Klock, M.D. 1995 $ 192,500 128,218
President, Chief Executive Officer & Director 1994(1) $ 184,200 482,330
John Dorson, Ph.D. 1995 $ 141,100 73,933
Vice-President and General Manager, Analytic 1994(1)(2) $ 107,578 172,650
Business Unit
Christopher M. Starr, Ph.D. 1995 $ 130,000 80,249
Vice-President, Research and Development 1994(1) $ 118,800 7,660
John F. Hamilton 1995 $ 113,000 64,762
Vice-President Finance and Administration 1994(1) $ 108,000 7,310
and Chief Financial Officer
</TABLE>
(1) Includes approximately $114,000 of 1994 officer's salaries deferred
pending completion of financing efforts and paid in the second quarter
of 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources".
(2) Dr. Dorson was hired in March, 1994. His base salary in 1994 was
$135,000 per year.
AGGREGATED FISCAL YEAR END OPTION VALUES
There were no option exercises in fiscal 1995 by the Named Officers. The
following table provides information with respect to the value of unexercised
options held by the Named Officers at the close of business on December 31, 1995
<TABLE>
<CAPTION>
Number of Number of Value of Value of
Unexercised Unexercised Unexercised Unexercised
Options at Fiscal Options at Fiscal Options at Fiscal Options at Fiscal
Year End, Year End, Year End, Year End,
Exercisable Unexercisable Exercisable (1) Unexercisable (1)
----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C>
John C. Klock, M.D. 274,926 335,622 $ -- $ 2,780
John Dorson, Ph.D. 92,397 154,186 $ -- $ 1,793
Christopher M. Starr, Ph.D. 183,298 54,611 $ -- $ 1,652
John F. Hamilton 163,287 58,785 $ -- $ 1,436
</TABLE>
(1) The market value of underlying securities is based on the closing price of
the Company's common shares on December 31, 1995 of $0.4764 minus the exercise
price. The closing price of $0.4764 was calculated by applying a Canadian
dollar/US dollar exchange rate of 0.7329 to the closing price at December 31,
1995 of Canadian $ 0.65.
14
<PAGE> 16
DIRECTOR COMPENSATION
During the fiscal year ended December 31, 1995, the Company's directors were
awarded the following stock option grants for services provided as directors:
R. William Anderson 48,000
John H. Craig 48,000
John S. Glass 48,000
F. Michael P. Warren 48,000
Gwynn R. Williams 48,000
EMPLOYMENT AGREEMENT
In connection with the Joint Venture Agreement, Glyko, Inc. entered into an
employment agreement (the "Employment Agreement") with Dr. John C. Klock, M.D.
(Klock) dated December 20, 1990. The Board of Directors ("the Board") approved a
renewal of the Employment Agreement for an additional two years effective
January 1, 1994 retaining Klock as the Company's president. Under the renewed
Employment Agreement, the Board annually reviews Klock's salary and makes
adjustments which the Board in its discretion deems to be appropriate. Glyko,
Inc. is obligated to continue paying Klock's compensation for a period of six
months following Klock's mental or physical incapacity or his death. Absent
notification of intention not to renew by Klock or the Board, the Employment
Agreement renews for subsequent periods, subject to agreement by the parties on
Klock's compensation for the renewal terms. The Employment Agreement may be
terminated by Klock upon three months' notice and by Glyko, Inc. upon six
months' notice or immediately upon a breach of Klock's duties required under the
Employment Agreement. By its terms, the Employment Agreement does not terminate
upon a merger, consolidation or sale of substantially all of the Company's
assets, and the obligations under the Employment Agreement shall be delegated to
the successor entity in such a situation.
15
<PAGE> 17
STOCK OPTION PLAN
Glyko has a stock option plan (the "Plan") under which options to purchase
Common Shares may be granted by the board of directors of Glyko to directors,
officers, consultants and key employees of Glyko. Options granted under the Plan
may either be "incentive stock options" under Section 422 of the United States
Internal Revenue Code, or non-statutory options. The Plan is administered by the
board of directors of Glyko. Options granted under the Plan will have an
exercise price which will not be less than the market price, less any
permissible discounts, of the Common Shares on the date prior to the date of
grant, which market price is deemed to be the closing sales price, or the
closing bid price if no sales were reported, of the Common Shares on any
established stock exchange or national market system upon which the Common
Shares are listed, including The Toronto Stock Exchange, or, if listed upon more
than one exchange or system, the exchange or system with the greatest volume of
trading in Common Shares on the date prior to the date of grant, or, if there is
no established market for the Common Shares, the fair market value of the Common
Shares as determined by the board of directors. Options will be exercisable over
a number of years specified at the time of the grant which cannot exceed ten
years. The aggregate number of Common Shares subject to options granted under
the Plan cannot exceed two million Common Shares and no one optionee is entitled
to hold options exceeding five percent of the Common Shares outstanding at the
time of the grant. Also, the maximum number of shares which may be reserved for
issuance to insiders under the Plan shall not exceed 10 percent of common shares
outstanding at the time of the grant.
Incentive stock options granted under the Plan terminate within 90 days of the
termination of an optionee's employment. Non-statutory options granted under the
Plan terminate within a period of time following the termination of the
optionee's employment, consulting or officer or director relationship which is
determined by the board of directors. Options also terminate within 12 months of
the death or total and permanent disability of the optionee. Options granted
under the Plan are not transferable. As of February 29, 1996 2,204,879 options
had been approved by the board of directors. Granting of options in excess of
the 2,000,000 share maximum is subject to stockholder approval.
Options will only be granted in compliance with applicable securities
legislation, and the Plan will be operated in conformity with the requirements
of any stock exchange upon which the Common Shares of Glyko may become listed.
Certain options granted in 1994 and 1995 are subject to regulatory approval by
the Toronto Stock Exchange.
16
<PAGE> 18
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists certain information regarding beneficial ownership of
the Glyko's Common Shares as of February 29, 1996, by (i) those persons who own
more than 5 percent of the Company's common stock, (ii) the Company's Chief
Executive Officer, (iii) each of the Company's directors, and (iv) the total
amount of Common Shares held by the Company's officers and directors as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNER OF CLASS
-------------- ---------------- ---------------- --------
<S> <C> <C> <C>
Common Shares Millipore Corporation (1) 2,461,177 15.3%
80 Ashby Road
Bedford, MA 01730
Common Shares Gwynn R. Williams (2) 2,473,450 15.4%
c/o Astroscan Ltd.
Ballabeg House
Cronkbourne Village
Bradden, Isle of Mann
British Isles, United Kingdom
Common Shares New York Life Insurance Company 1,748,750 10.9%
Common Shares Glycomed Corporation 1,326,654 8.2%
860 Atlantic Avenue
Alameda, CA 94501
Common Shares John C. Klock, M.D. (3) 853,154 5.3%
c/o Glyko, Inc.
81 Digital Drive
Novato, CA 94949
Common Shares R. William Anderson (4) 51,540 *
Common Shares John H. Craig (4) 52,541 *
Common Shares John Glass (5) 50,000 *
Common Shares F. Michael P. Warren (6) 62,790 *
Common Shares All Officers and Directors (7) 4,118,592 25.6%
</TABLE>
* Less than 1%.
(1) Does not reflect pending issuance of 500,000 shares in exchange for
termination of marketing rights.
(2) Includes 51,540 Common Shares issuable upon exercise of options within
60 days of February 29, 1996.
(3) Includes 360,009 Common Shares issuable upon exercise of options within
60 days of February 29, 1996.
(4) Includes 51,540 Common Shares issuable upon exercise of options within
60 days of February 29, 1996.
(5) Includes 50,000 Common Shares issuable upon exercise of options within
60 days of February 29, 1996.
(6) Includes 62,790 Common Shares issuable upon exercise of options within
60 days of February 29, 1996.
(7) Includes 1,170,948 Common Shares issuable upon exercise of options
within 60 days of February 29, 1996, excludes shares held by Millipore
and Glycomed.
17
<PAGE> 19
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All material transactions of the Company during the past two years in which any
director or senior officer, or any principal stockholder of the Company has an
interest are as described below:
In October 1994, the Company entered into a bridge financing agreement with
Gwynn Williams providing the Company with a $250,000 convertible working capital
credit facility to support operations pending completion of equity financing
efforts. In the fourth quarter of 1994 the Company drew upon this bridge loan
facility in the amount of $250,000. On April 5, 1995, in conjunction with the
successful completion of private equity financing efforts, that note and accrued
interest thereupon of $7,808 were converted into 400,748 shares of common stock
and warrants to purchase an equal number of shares of common stock.
The Company rented facilities from Millipore in 1995 and 1994, incurring rental
and facilities expense of $260,232 and $247,284 respectively.
John H. Craig, a member of the Board of Directors, is a partner in a law firm
utilized by the Company. Fees paid to this law firm and Mr. Craig's former law
firm were approximately $7,650 in 1995 and $9,173 in 1994.
MILLIPORE
In 1992 Glyko, Inc. granted Millipore exclusive worldwide rights to market and
sell Glyko, Inc.'s analytic products to the laboratory research market, (the
"Distribution Agreement"). The Distribution Agreement had a term of six years
commencing on October 1, 1992. In September, 1993, the Company negotiated an
amendment to the Distribution Agreement pursuant to which the Company received
the non-exclusive right to market and distribute its analytic products in
certain markets, principally the United States. In April 1994, the Company and
Millipore agreed to terminate the Distribution Agreement. In exchange for
relinquishing marketing rights to Glyko products, Millipore will receive 500,000
shares of Glyko common stock pending regulatory approval. In the third quarter
of 1994, the Company recorded a charge of $219,811 for costs related to the
termination of the Distribution Agreement. This amount represents the estimated
fair market value, at April 1994, of stock to be issued to Millipore as a result
of the termination of the Distribution Agreement.
SHARE TRANSFER RESTRICTIONS
Millipore, Glycomed and Williams (the "Corporate Partners") have agreed to
certain restrictions relating to their shares in Glyko. The Corporate Partners'
shares in Glyko may not be transferred except to Glyko or Glyko, Inc., when
transferred to an 80 percent or more owned subsidiary of the Corporate Partner
that agrees to be bound by the share transfer restrictions, in a transaction in
which at least 65 percent of the voting power of Glyko is acquired by a party
other than a Corporate Partner, in a transaction (including a public offering),
in which no more than 5 percent of Glyko's voting stock is transferred to any
single person or group, pursuant to Rule 144 of the 1933 Act (when applicable),
in response to a tender offer made by or on behalf of, or not opposed by, Glyko
and the offeror agrees to be bound by the sale of business provisions of the
Joint Venture Agreement and the Distribution Agreement. In addition, a Corporate
Partner may sell shares in the case of a tender offer for at least 40 percent of
Glyko's shares; provided that Glyko shall have an assignable right of first
refusal with respect to the Corporate Partner's shares in such situation.
Pursuant to an agreement (the "Escrow Agreement") dated December 10, 1992 among
the Founders, Montreal Trust Company of Canada (the "Trustee") and Glyko,
6,030,428 Common Shares (the "Escrowed Shares") were placed on closing on
deposit with the Trustee. The Trustee will release the Escrowed Shares to the
Founders as follows: (a) 10 percent on September 10, 1993; (b) 20 percent on
September 10, 1994, September 10, 1995 and September 10, 1996, respectively; and
(c) the remaining 30 percent on September 10, 1997. As of December 31, 1995
3,015,211 of the escrowed shares remained on deposit with a trustee.
Pursuant to an agreement (the "Millipore Escrow Agreement") dated April 28, 1994
among Millipore, Montreal Trust Company of Canada (the "Trustee") and Glyko,
500,000 Common Shares (the "Millipore Escrowed Shares") will, upon the date of
their issuance ("the Issue Date"), be placed on closing on deposit with the
Trustee. The Trustee will release the Escrowed Shares to Millipore as follows:
(a) 10 percent nine months after the Issue Date, ("the First Release"); (b) 20
percent on one, two and three years after the First Release, respectively; and
(c) the remaining 30 percent four years after the First Release.
18
<PAGE> 20
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT
Exhibit
Number Description
------ -----------
3.1 Registrant's Articles of Incorporation and Bylaws (filed as
exhibit 3.1 to Form 10-SB Registration Statement No. 0-21994
dated August 6, 1993 and incorporated herein by reference).
10.1 Registrant's Stock Option Plan(filed as exhibit 10.1 to Form
10-SB Registration Statement No. 0-21994 dated August 6, 1993
and incorporated herein by reference).
10.2 Joint Venture Agreement between: Registrant; Millipore
Corporation; Glycomed Incorporated; Gwynn R. Williams;
Astroscan, Ltd.; and Astromed, Ltd. dated December 18, 1990
(filed as exhibit 10.2 to Form 10-SB Registration Statement
No. 0-21994 dated August 6, 1993 and incorporated herein by
reference).
10.3 Distribution Agreement between Registrant and Millipore
Corporation dated December 18, 1990 (filed as exhibit 10.3 to
Form 10-SB Registration Statement No. 0-21994 dated August 6,
1993 and incorporated herein by reference).
10.4 License Agreement between Registrant, and Astroscan, Ltd. and
Astromed, Ltd. (filed as exhibit 10.4 to Form 10-SB
Registration Statement No. 0-21994 dated August 6, 1993 and
incorporated herein by reference).
10.5 License Agreement between Registrant and Glycomed Incorporated
(filed as exhibit 10.5 to Form 10-SB Registration Statement
No. 0-21994 dated August 6, 1993 and incorporated herein by
reference).
10.6 Loan Agreement between Registrant, and Millipore Corporation
and Gwynn R. Williams, dated April 9, 1992 (filed as exhibit
10.6 to Form 10-SB Registration Statement No. 0-21994 dated
August 6, 1993 and incorporated herein by reference).
10.7 Employment Agreement between Registrant and John C. Klock,
M.D., dated December 20, 1990 (filed as exhibit 10.7 to Form
10-SB Registration Statement No. 0-21994 dated August 6, 1993
and incorporated herein by reference).
10.8 Exchange Agreements between Registrant, and the share and
option holders of Glyko, Inc., dated December 10, 1992
(filed as exhibit 10.8 to Form 10-SB Registration Statement
No. 0-21994 dated August 6, 1993 and incorporated herein by
reference).
10.9 Amendment Number Two to Exclusive Distribution and Supply
Agreement between Registrant and Millipore Corporation dated
September 22, 1993 (filed as exhibit 10.4 to Form 10-KSB
Statement dated December 31, 1993 and incorporated herein by
reference).
10.10 Amendment Number Two to Joint Venture Agreement between:
Registrant; Millipore Corporation; Glycomed Incorporated;
Gwynn R. Williams; Astroscan, Ltd.; and Astromed, Ltd. dated
April 28, 1994 (filed as exhibit 10.1 to Form 10-QSB dated
March 31, 1994 and incorporated herein by reference).
10.11 Employment Agreement between Registrant and John C. Klock,
M.D., dated January 1, 1994 (filed as exhibit 10.2 to Form
10-QSB dated March 31, 1994 and incorporated herein by
reference).
10.12 Glyko Biomedical Share Option Plan - 1994 (filed as exhibit
10.1 to Form 10-QSB dated June 30, 1994 and incorporated
herein by reference).
10.13 Development and Supply Agreement between Registrant and
Bio-Rad Laboratories, Inc., dated February 16, 1995.
10.14 International Distribution Agreement between Registrant and
Toyobo Co., Ltd. and MC Medical. Inc. dated September 12,
1995.
21.1 List of Registrant's Subsidiaries (filed as exhibit 22.1 to
Form 10-SB Registration Statement No. 0-021994 dated August
6, 1993 and incorporated herein by reference)
(b) REPORTS ON FORM 8-K
No reports were filed on Form 8-K during the quarter ended December 31,
1995.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, the registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GLYKO BIOMEDICAL LTD.
Dated: March 25, 1996 By: \s\ John C. Klock, M.D.
- --------------------- -------------------------------------
John C. Klock, M.D.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John C. Klock and John F. Hamilton,
jointly and severally, his attorney-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to the
Report on Form 10-KSB and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
\s\ John C. Klock, M.D. March 25, 1996
- ------------------------------ ------------------------
John C. Klock, M.D. President, Chief Executive Officer and Director
\s\ John Dorson, Ph.D. March 29, 1996
- ------------------------------ ------------------------
John Dorson, Ph.D. Vice-President and General Manager, Analytic Business
Unit
\s\ John F. Hamilton March 29, 1996
- ------------------------------ ------------------------
John F. Hamilton Vice-President, Finance and Administration and Chief
Financial Officer
\s\Christopher M. Starr, Ph.D. March 29, 1996
- ------------------------------ ------------------------
Christopher M. Starr, Ph.D. Vice-President Research and Development
\s\ R. William Anderson March 25, 1996
- ------------------------------ ------------------------
R. William Anderson Director
\s\ John S. Craig March 26, 1996
- ------------------------------ ------------------------
John H. Craig Secretary and Director
\s\ John S. Glass March 25, 1996
- ------------------------------ ------------------------
John S. Glass Director
\s\ F. Michael P. Warren, Q.C. March 26, 1996
- ------------------------------ ------------------------
F. Michael P. Warren, Q.C. Director
\s\ Gwynn R. Williams March 26, 1996
- ------------------------------ ------------------------
Gwynn R. Williams Director
</TABLE>
20
<PAGE> 22
INDEX TO FINANCIAL STATEMENTS
F.2 Report of Independent Public Accountants
F.3 Consolidated Balance Sheets
F.4 Consolidated Statements of Operations
F.5 Consolidated Statements of Stockholders' Equity (Deficit)
F.6 Consolidated Statements of Cash Flows
F.7 to F.12 Notes to Consolidated Financial Statements
F.1
<PAGE> 23
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Glyko Biomedical Ltd.:
We have audited the accompanying consolidated balance sheets of Glyko Biomedical
Ltd. and subsidiary (the Company) as of December 31, 1995 and 1994 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Glyko Biomedical Ltd. and
subsidiary as of December 31, 1995 and 1994, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred significant
recurring net losses and does not have sufficient cash to fund planned 1996
operations. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 1. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.
Oakland, California Arthur Andersen LLP
January 16, 1996
F.2
<PAGE> 24
PART I.
ITEM 1. FINANCIAL STATEMENTS
GLYKO BIOMEDICAL LTD.
CONSOLIDATED BALANCE SHEETS
(US DOLLARS)
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 620,720 $ 79,294
Trade receivables 356,806 304,059
Inventories 108,518 38,664
Other current assets 5,132 9,157
------------ ------------
Total current assets 1,091,176 431,174
Property, plant and equipment, net 112,169 178,338
Other assets 2,239 2,416
------------ ------------
Total assets $ 1,205,584 $ 611,928
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 122,375 $ 237,896
Accrued liabilities 221,424 171,612
Deferred revenue 174,386 --
Payable to stockholder 219,811 219,811
Bridge loan from stockholder -- 253,031
Deferred compensation -- 114,083
------------ ------------
Total current liabilities 737,996 996,433
Deferred facilities costs 166,535 230,882
Deferred rent 76,590 79,182
Obligations under capital lease -- 14,016
------------ ------------
Total liabilities 981,121 1,320,513
Stockholders' equity (deficit):
Common stock, no par value, unlimited shares
authorized, 14,567,944 shares issued and outstanding
(9,781,522 in 1994) 11,304,356 9,000,711
Common stock warrants 278,085 --
Accumulated deficit (11,357,978) (9,709,296)
------------ ------------
Total stockholders' equity (deficit) 224,463 (708,585)
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 1,205,584 $ 611,928
============ ============
</TABLE>
See accompanying notes.
F.3
<PAGE> 25
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. DOLLARS)
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Net revenues:
Sales of products and services $ 1,342,406 $ 882,903
Other revenues 226,404 --
------------ ------------
Total revenues: 1,568,810 882,903
Expenses:
Cost of products and services 511,654 319,829
Research and development 1,063,054 1,230,241
Selling, general and administrative 1,661,904 1,822,561
------------ ------------
3,236,612 3,372,631
------------ ------------
Loss from operations (1,667,802) (2,489,728)
Interest income 29,802 16,279
Interest and other expense (10,682) (3,008)
------------ ------------
Net loss $ (1,648,682) $ (2,476,457)
------------ ------------
Net loss per common share $ (0.12) $ (0.25)
============ ============
Weighted average number of shares
used in computing per share amounts 13,255,616 9,781,522
============ ============
</TABLE>
See accompanying notes.
F.4
<PAGE> 26
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(U.S. DOLLARS)
<TABLE>
<CAPTION>
Common Stock Common Stock Warrants
---------------------------- ---------------------------- Accumulated
Shares Amount Shares Amount Deficit Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 9,781,522 $ 9,000,711 $ (7,232,839) $ 1,767,872
Net loss for the year -- -- (2,476,457) (2,476,457)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 1994 9,781,522 9,000,711 -- -- (9,709,296) (708,585)
Net loss for the year (1,648,682) (1,648,682)
Private placement financing, net
of issuance costs of $201,722 4,786,422 2,303,645 4,786,422 278,085 2,581,730
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 1995 14,567,944 $ 11,304,356 4,786,422 $ 278,085 $(11,357,978) $ 224,463
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes.
F.5
<PAGE> 27
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. DOLLARS)
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,648,682) $(2,476,457)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 88,533 102,737
Loss on disposal of property, plant and equipment -- 1,576
Interest accrued on bridge loan 4,777 3,031
Change in assets and liabilities:
Trade receivables (52,747) (187,779)
Inventories (69,854) 88,408
Other current assets 4,025 (9,157)
Payable to stockholder -- 394,945
Accrued liabilities and deferred rent 52,049 (47,780)
Deferred revenue 174,386 --
Accounts payable (105,221) 149,360
Deferred facilities costs (64,347) --
Deferred compensation (81,083) 114,083
----------- -----------
Total adjustments (49,482) 609,424
----------- -----------
Net cash used in operating activities (1,698,164) (1,867,033)
Cash flows from investing activities:
Capital expenditures (22,187) (6,146)
----------- -----------
Net cash used in investing activities (22,187) (6,146)
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants, net 2,280,622 --
Proceeds from bridge loan -- 250,000
Repayments on capital lease obligation (18,845) (5,750)
----------- -----------
Net cash provided by financing activities 2,261,777 244,250
----------- -----------
Net increase (decrease) in cash 541,426 (1,628,929)
Cash and cash equivalents, beginning of period 79,294 1,708,223
----------- -----------
Cash and cash equivalents, end of period $ 620,720 $ 79,294
=========== ===========
Supplemental disclosure of noncash financing activities:
Conversion of deferred compensation to common stock and warrants $ 33,000 $ --
Conversion of accounts payable to common stock and warrants 10,300 --
Conversion of bridge loan to common stock and warrants 257,808 --
Common stock issued in exchange for financing services 118,403 --
Purchase of asset under capital lease obligation -- 38,610
</TABLE>
See accompanying notes.
F.6
<PAGE> 28
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND DESCRIPTION OF THE BUSINESS
Glyko Biomedical Ltd. (the Company) is a Canadian company which was
established in 1992 to acquire all of the outstanding capital stock of
Glyko, Inc., a Delaware corporation. The Company, through its
wholly-owned subsidiary Glyko, Inc., is developing new techniques to
analyze and manipulate carbohydrates for research, diagnostic and
pharmaceutical purposes. The Company has developed a product line of
laboratory instruments and chemical kits, referred to as analytic
products, which are used in carbohydrate analysis. Shipments of these
products began in December 1992. The Company is also developing certain
carbohydrate diagnostic products.
Since its inception, the Company has incurred cumulative losses of
$11,357,978 and expects to continue to incur losses through 1996. In
December 1992, the Company successfully completed an initial public
offering on the Toronto Stock Exchange. Since that time, the Company
has maintained liquidity by utilizing the proceeds of that offering, by
utilizing the proceeds of a private equity placement in the second
quarter of 1995, by using cash receipts from operations, and by drawing
upon a bridge loan from a stockholder. To continue as a going concern
the Company must realize a significant increase in sales, receive
additional funding or significantly reduce expenditures. Such funding
may come individually or collectively from equity or debt placements,
licensing and marketing agreements or by collaborative research
agreements with strategic partners. There can be no assurance that such
funding will be obtained. If adequate funding is not obtained,
operations will be materially adversely affected.
The preparation of the Company's financial statements, in accordance
with generally accepted accounting principles includes certain
estimates to be made by management. Actual results may differ from
these estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements and related
footnotes have been prepared in conformity with U.S. generally accepted
accounting principles using U.S. dollars. The consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiary Glyko, Inc. All significant intercompany accounts and
transactions have been eliminated. Certain balances in the prior years
have been reclassified to conform with the current year presentation.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of amounts held with banks and
short-term investments with original maturities of 90 days or less.
INVENTORIES:
Inventories consist of raw materials, analytic kits, and
instrument-based systems held for sale. Inventories are stated at the
lower of cost (first-in, first-out method) or estimated market value.
The components of inventories are as follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
-------- --------
<S> <C> <C>
Raw materials $ 41,768 $ 23,808
Finished products 66,750 14,856
-------- --------
$108,518 $ 38,664
======== ========
</TABLE>
F.7
<PAGE> 29
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. The cost and
accumulated depreciation for property, plant and equipment sold,
retired, or otherwise disposed of are relieved from the accounts, and
the resulting gains or losses are reflected in the consolidated
statements of operations. Depreciation is computed using the
straight-line method over the following estimated useful lives:
Office furniture 5 years
Computer equipment 3 years
Lab and production equipment 5 years
Depreciation relating to equipment used in research and development
activities is included in research and development expense in the
consolidated statements of operations.
FOREIGN EXCHANGE:
As all of the Company's operations are located in the United States,
the Company has adopted the U.S. dollar as its functional currency. In
accordance with Statement of Financial Accounting Standard No. 52,
"Foreign Currency Translation", assets and liabilities denominated in
foreign currency are translated into U.S. dollars at the current rate
of exchange existing at year end and revenues and expenses are
translated at the average monthly exchange rates. Transaction gains and
losses included in the consolidated statements of operations are not
material.
PRODUCT SALES:
The Company recognizes product revenues and related cost of sales upon
shipment of products. Service revenues are recognized upon completion
of services as evidenced by the transmission of reports to customers.
Other revenues, principally licensing and distribution fees, are
recognized upon completion of applicable contractural obligations.
At times, the Company has received payment in advance for future
product shipments. Such payments are classified as deferred revenue on
the accompanying Balance Sheet. Upon shipment of products revenue is
recognized and the corresponding liability (deferred revenue) is
reduced.
Net revenues of $1,568,810 in 1995 consisted entirely of direct product
sales, sales to distributors for resale and other revenues. Net
revenues of $882,903 in 1994 consisted primarily of direct product
sales of $849,091 and sales to stockholders for resale (prior to the
termination of the Agreement as described below) of $33,812.
In 1995, net revenues (including sales and licensing fees) to one
distributor were 30 percent of total net revenues.
In 1990, the Company entered into an agreement (the "Agreement") giving
one of its stockholders the exclusive right to market and distribute
the Company's analytic products for an initial period of six years from
the time the Company developed a commercially marketable product.
During 1993, the Agreement was amended to grant the Company the
non-exclusive right to market and distribute the Company's analytic
products in the United States (direct product sales). In April 1994,
the stockholder and the Company agreed to terminate the Agreement. In
exchange for relinquishing its rights under the Agreement, the
stockholder will receive 500,000 shares of common stock, subject to
regulatory approval. In the third quarter of 1994 the Company recorded
a charge to operations of $219,811 for costs related to the termination
of the Agreement. This amount represents the estimated fair market
value of stock to be issued as a result of the termination of the
Agreement.
F.8
<PAGE> 30
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES:
In 1992 the Company adopted FASB Statement No. 109, "Accounting for
Income Taxes," which requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income
tax assets and liabilities are computed annually for differences
between the financial statement and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future based
on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.
LOSS PER COMMON SHARE:
Loss per common share is computed based on the weighted average number
of shares outstanding during each period.
ADOPTION OF ACCOUNTING PRONOUNCEMENTS:
The Company is required to adopt SFAS No. 121, " Accounting for the
Impairment of Long-Lived Assets and for the Long-Lived Assets to be
Disposed of" beginning January 1, 1996. The Company is also required to
adopt SFAS No. 123, "Accounting for Stock-Based Compensation" beginning
January 1, 1996. The Company believes the adoption of those
pronouncements will not have a material impact on the financial
statements of the Company taken as a whole.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1995 and 1994 consisted
of the following:
<TABLE>
<CAPTION>
December 31,
1995 1994
-------- --------
<S> <C> <C>
Lab equipment $242,349 $240,482
Computer equipment 195,672 183,551
Production equipment 42,095 39,784
Office furniture 18,069 18,069
Leasehold improvements 8,554 8,554
-------- --------
506,739 490,440
-------- --------
Less accumulated depreciation: 394,570 312,102
-------- --------
Property, plant and equipment, net $112,169 $178,338
======== ========
</TABLE>
F.9
<PAGE> 31
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. INCOME TAXES
The Company's deferred tax asset at December 31, 1995 and 1994 is:
<TABLE>
<CAPTION>
December 31,
1995 1994
----------- -----------
<S> <C> <C>
Net operating loss carryovers $ 4,313,000 $ 3,553,000
Research and development expenses
capitalized for tax purposes 205,000 129,000
Research and development
credit carryovers 490,000 424,000
Issue cost carryovers 216,000 335,000
Other temporary differences (248,000) 75,000
----------- -----------
4,976,000 4,516,000
Valuation allowance (4,976,000) (4,516,000)
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========
</TABLE>
Total U.S. federal and state net tax operating loss carryforwards as of
December 31, 1995 are approximately $10,471,000 and $809,000
respectively. Federal operating loss carryforwards expire from 2006 to
2010 and state operating loss carryforwards expire from 1997 to 2000.
The Company also has research and development credit carryovers of
$490,000 which expire from 2007 to 2009. For Canadian income tax
purposes, the Company has net operating loss carryforwards of
approximately $809,000 which expire from 1999 to 2001. Under current
U.S. tax law, future changes in ownership of the Company may limit the
utilization of U.S. net operating loss and credit carryforwards.
5. BRIDGE LOAN
In the fourth quarter of 1994 the Company drew upon a bridge loan
facility from one of its stockholders in the amount of $250,000. This
bridge loan, and accrued interest incurred thereupon were converted
into 400,748 units, consisting of one share of common stock and one
warrant to purchase one share of common stock, in the second quarter of
1995.
6. COMMITMENTS
The Company leases its facilities, and office and other equipment under
agreements that expire at various dates through 2000. The Company
leases its facilities from one of its stockholders under a
noncancellable operating sublease agreement expiring December 31, 1998.
The Company recognizes rental expense on a straight line basis
calculated over the full term of the sublease agreement. Due to
escalation clauses in the operating sublease agreement, rental payments
do not equal rent expense recognized, and the difference between
cumulative rental payments and rental expense recognized is classified
as a non-current liability.
The Company has negotiated payment deferrals for certain building lease
and related facilities charges. As of December 31, 1995, $166,535 in
building lease and related facilities charges for 1995 and prior
periods was unpaid.
F.10
<PAGE> 32
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Aggregate minimum annual rental commitments under operating leases are
as follows:
<TABLE>
<CAPTION>
Years ending December 31,
-----------------------------------------
<S> <C>
1996 $ 116,135
1997 462,539
1998 228,791
1999 6,900
2000 and thereafter 4,888
---------
$ 819,253
=========
</TABLE>
Rent expense was $226,668 in 1995 and $226,668 in 1994.
7. STOCKHOLDERS' EQUITY
In December 1992, the Company completed an initial public offering of
2,881,601 shares of its common stock on the Toronto Stock Exchange. In
connection with that offering, 6,030,428 common shares held by the
founders of the Company were placed on deposit with a trustee.
The trustee will release the escrowed shares to the founders as
follows: a) 10 percent immediately after nine months following the date
of the public offering; b) 20 percent immediately after each of the
first, second and third anniversary dates following the date of the
first release of shares and c) the remaining 30 percent immediately
after the fourth anniversary date thereafter. As of December 31, 1995
3,015,211 of the escrowed shares remained on deposit with a trustee.
In the second quarter of 1995, the Company closed a private equity
placement offering (the Financing). Investors participating in the
Financing purchased units which consisted of one share of common stock
and one warrant to purchase one share of common stock. The Company
issued units in exchange for cash, and also in exchange for the
settlement of certain outstanding liabilities. The units were priced at
C$0.80 with an exercise price on the warrant of C$0.90. The Company
established a balance sheet value for the common stock warrants by
subtracting the discounted fair market value for one share of the
Company's common stock from the price of one unit. The common stock
warrants expire in 2000. The Financing raised approximately $2.78
million, consisting of approximately $2.36 million in cash and $420,000
for the settlement of a stockholder/director bridge loan, common stock
issued for financing services and certain other liabilities.
The Company has a stock option plan (the Plan) under which options to
purchase common stock may be granted by the Board of Directors to
directors, officers, consultants and key employees at not less than
fair market value, less any permissible discounts, on the date of
grant. Options granted under the Plan may be incentive stock options
(as defined under Section 422 of the U.S. Internal Revenue Code) or
non-statutory stock options. Options are exercisable over a number of
years specified at the time of the grant which cannot exceed ten years.
The maximum aggregate number of shares which may be optioned and sold
under the Plan is 2,000,000 shares. Granting of options in excess of
the 2,000,000 share maximum is subject to stockholder approval. Certain
options granted in 1994 and 1995 are subject to regulatory approval by
the Toronto Stock Exchange.
F.11
<PAGE> 33
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options granted under the Plan as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Option Shares
Options Price Options Available
Outstanding Per Share (1) Exercisable for Grant (2)
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 769,271 Cdn. $2.75 404,512 217,881
Options granted in 1994 943,890 Cdn. $0.63 - $2.40
Options canceled in 1994 (278,861) Cdn. $1.00 - $2.95
--------- --------- --------
Balance at December 31, 1994 1,434,300 700,185 565,700
--------- --------- --------
Options granted in 1995 839,109 Cdn. $0.60 - $0.95
Options canceled in 1995 (68,530) Cdn. $0.80 - $2.40
--------- --------- --------
Balance at December 31, 1995 2,204,879 1,210,797 (204,879)
========= ========= ========
</TABLE>
(1) The US$ equivalent of Canadian $1.00 at December 31, 1995 was
approximately $0.7329.
(2) Options granted in excess of the Plan's 2,000,000 share
maximum are subject to stockholder approval. Such options
cannot be exercised until and unless the stockholder's approve
an increase in the maximum number of shares which may be
optioned and sold under the Plan.
8. RELATED PARTY TRANSACTIONS
The Company has entered into certain transactions with its stockholders
since its inception. These transactions include the purchase of
supplies and equipment and rental of the Company's facilities. Total
cost of these transactions for the years ended December 31, 1995 and
1994 were approximately $260,232 and, $247,284 respectively. By
agreement with its stockholder the Company has deferred payments on
certain facilities charges. Deferred facilities charges were $166,535
at December 31, 1995 and $230,882 at December 31, 1994. Additionally,
one of the members of the Board of Directors is a partner in a law firm
utilized by the Company. Fees paid to this law firm and to the member's
former law firm were approximately $7,650 in 1995, and $9,173 in 1994.
Amounts due to stockholders for legal services were $1,759 in 1995 and
$6,834 in 1994.
F.12
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location in Form 10-KSB
----------- ----------- -----------------------
<S> <C> <C>
NOTE: Exhibits 10.13 and 10.14 have been filed separately
with the Securities and Exchange Commission pursuant to
applications for confidential treatment.
10.13 Development and Supply Agreement between Registrant and
Bio-Rad Laboratories, Inc., dated February 16, 1995. NOTE:
The full text of this exhibit has been filed separately with
the Securities and Exchange Commission pursuant to an
application for confidential treatment. Page 35
10.14 International Distribution Agreement between Registrant and
Toyobo Co., Ltd. and MC Medical. Inc. dated September 12,
1995. NOTE: The full text of this exhibit has been filed
separately with with the Securities and Exchange Commission
pursuant to an application for confidential treatment. Page 55
</TABLE>
<PAGE> 1
EXHIBIT 10.13
NOTE: The full text of this document has been filed separately with the
Securities and Exchange Commission pursuant to an application for confidential
treatment of the document. In the following material, omitted confidential
information is noted by capital "X's".
DEVELOPMENT AND SUPPLY AGREEMENT
This Development and Supply Agreement (the "Agreement") is entered into
as of February __16__, 1995 (the "Effective Date") by and between Bio-Rad
Laboratories, Inc., a Delaware corporation with offices at 2000 Alfred Nobel
Drive, Hercules, California 94547 (facsimile: 510-741-6858) ("Bio-Rad") and
Glyko, Inc., a Delaware corporation with principal offices at 81 Digital Drive,
Novato, California 94949 (facsimile: 415-382-7889) ("Glyko").
RECITALS
WHEREAS, Bio-Rad has developed many general purpose electrophoresis
products for the bioresearch market and has established a substantial installed
customer base of electrophoresis apparatuses such as gel boxes, power supplies
and imaging systems; and
WHEREAS, Glyko has developed the FACE(R) (Fluorophore Assisted
Carbohydrate Electrophoresis) system, which is a system for performing
carbohydrate analysis composed of fluorescent labeling reagents, enzymes and
related chemicals; precast gels and chemical buffers; imaging instruments; a
computer with interface card; and the FACE software; and
WHEREAS, Bio-Rad desires that Glyko cosmetically modify some of the
FACE system components to conform to the size and "look and feel" of the
existing Bio-Rad product line so that Bio-Rad can market the modified FACE
system components for carbohydrate electrophoresis to Bio-Rad's customers; and
WHEREAS, Glyko desires to supply to Bio-Rad and Bio-Rad desires to
purchase from Glyko, such modified FACE system components for sale by Bio-Rad to
its customers, pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties hereby agree as follows:
1. DEFINITIONS
1.1 Carbohydrate Analysis. "Carbohydrate Analysis" means the
determination of whether a chemical sample contains carbohydrates and if so, the
quantity and nature of the specific carbohydrate that it contains, such as
N-linked carbohydrates, O-linked carbohydrates, etc.
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<PAGE> 2
1.2 FACE Kit. "FACE Kit" means a kit containing FACE Reagents, precast
slab gels and electrophoresis buffers that are necessary to perform a specific
Carbohydrate Analysis.
1.3 FACE Reagents. "FACE Reagents" means fluorescent labeling reagents,
Enzymes and related chemicals that are selected by Glyko from time to time for
inclusion in the FACE Kit and that are necessary to prepare a sample for
Carbohydrate Analysis using the FACE Hardware.
1.4 Capillary Electrophoresis Reagents. "Capillary Electrophoresis
Reagents" means FACE reagents which have been adapted for use with capillary
electrophoresis instead of slab gel electrophoresis.
1.5 Enzymes. "Enzymes" means any enzyme, either from natural sources or
recombinant, that act on or modify carbohydrates, including glycosidases,
glycotransferases or other carbohydrate modifying activity.
1.6 FACE Hardware. "FACE Hardware" means the FACE imaging instrument
and the FACE software.
1.7 Third Party Products. "Third Party Products" shall mean computers,
printers, optical disk drives and other hardware and components manufactured by
third parties which Glyko purchases and makes generally available for sale
without modification (except installation of software and hardware).
1.8 Field. "Field" means the field of research and development of
biological substances, and specifically excludes the fields of diagnosis and
treatment of disease.
1.9 Modified FACE Products. "Modified FACE Products" shall mean (i)
FACE Kits, precast slab gels which are included within such FACE Kits and FACE
Hardware which have been modified by Glyko as contemplated by this Agreement and
(ii) any and all future models of the FACE Kits and FACE Hardware, with respect
to which Bio-Rad exercises its modification and supply rights under Section 5.1
hereof.
1.10 Estimate. An "Estimate" shall mean, with respect to any
modifications to the FACE Kits or FACE Hardware to be performed by Glyko
hereunder, Glyko's good faith estimate of the time and expense required to make
such modifications. Each Estimate shall be based on a Project Specification and
shall be provided to Bio-Rad within a reasonable time after the agreed Project
Specification is agreed to by the parties.
1.11 Project Specification. A "Project Specification" shall mean, with
respect to any modifications to the FACE Kits or FACE Hardware to be performed
by Glyko hereunder, the mutually agreed written objectives and specifications
developed by the parties prior to Glyko's calculation and production of an
Estimate.
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2. DEVELOPMENT
2.1 Cosmetic Modifications; Payment. Glyko agrees to modify the FACE
Kits (including without limitation the precast gels contained within such FACE
Kits), FACE Hardware and Capillary Electrophoresis Reagents to conform to the
size and "look and feel" of the existing Bio-Rad product line (the "Cosmetic
Modifications") in accordance with the applicable Estimates therefor; provided,
that in the event Bio-Rad does not provide Glyko with written acceptance of an
Estimate upon Bio-Rad's receipt thereof, the time for completion of such
Cosmetic Modifications (as set forth in the applicable Estimate) shall be
delayed one (1) day for each day that Bio-Rad delays its provision of written
acceptance. The initial Cosmetic Modifications which shall be the subject of
Project Specifications and Estimates hereunder are set forth in Exhibit A
hereto. Additional Cosmetic Modifications to the FACE Kits and FACE Hardware may
be made as the parties may mutually agree from time to time; provided, that upon
Bio-Rad's request under Section 5.1 hereof, Glyko shall have the obligation to
cosmetically modify future models of the FACE Hardware and FACE Kits in
accordance with an Estimate. Upon Bio-Rad's written acceptance of an Estimate,
Glyko shall commence performance of the Cosmetic Modifications contemplated
therein and Bio-Rad shall pay Glyko, and/or reimburse Glyko for, the fees and
expenses of such Cosmetic Modifications, at the times and in the amounts set
forth in the applicable Estimate. If at any time prior to
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Bio-Rad does not accept any
Estimate, then Bio-Rad can terminate this Agreement and receive a full return of
all Fees, provided that the License Agreement shall also terminate. An Estimate
may not be revised as to time, fees and/or expenses except as set forth above
and except by the mutual written agreement of the parties. The responsibilities
of each party shall be set forth in each Project Specification and reproduced in
each Estimate based thereon. The parties shall mutually agree when each Cosmetic
Modification hereunder is completed such that the products modified hereunder
are ready for commercial sale.
2.2 Improvements; Payment. In the event that any Project Specification
contemplates modifications to FACE Kits or FACE Hardware which are not for size
or "look and feel" and which involve changes in the functionality, composition
and/or parts of a FACE Kit or FACE Hardware (each an "Improvement"), Glyko shall
provide to Bio-Rad an Estimate which contains, in addition to time, fee and
expenses terms, the price for the supply of such FACE Kits or FACE Hardware to
Bio-Rad. Upon Bio-Rad's written acceptance of an Estimate (i) Glyko shall make
Improvements to the FACE Kits (including without limitation the precast gels
contained within such FACE Kits) and FACE Hardware in accordance with the
applicable Estimates therefor; provided, that in the event Bio-Rad does not
provide Glyko with written acceptance of an Estimate upon Bio-Rad's receipt
thereof, the time for completion of such Improvements (as set forth in the
applicable Estimate) shall be delayed one (1) day for each day that Bio-Rad
delays its provision of written acceptance; (ii) Bio-Rad shall pay Glyko, and/or
reimburse Glyko for, the fees and expenses of such Improvements, at the times
and in the amounts set forth in the applicable Estimate; and (iii) the price to
Bio-Rad for the supply of such FACE Kits and FACE Hardware shall be as set forth
in the applicable Estimate.
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<PAGE> 4
2.3 Schedule. Subject to the foregoing, each party shall use its
commercially reason able efforts to perform its responsibilities under this
Section 2 according to the time schedule set forth in each Estimate. In the
event either party is late in the performance of such responsibilities, the
other party's responsibilities shall be delayed by the same time period.
2.4 Personnel; Non-Solicitation. Each party shall be solely responsible
for the salary, benefits and other compensation of its employees. Each party
agrees not to directly or indirectly solicit the other's employees during the
term of this Agreement.
2.5 Ownership.
(a) Intellectual Property. As used in this Section 2.5,
"Intellectual Property" means data, inventions, improvements, technical
information, trademarks, trade secrets, know-how, patents and other patent
rights.
(b) Glyko. Glyko shall be the sole owner of all Intellectual
Property with respect to the FACE Kits, FACE Hardware, Capillary Electrophoresis
Reagents and any and all portions thereof and modifications and improvements
thereto, regardless of any contributions made by Bio-Rad personnel to the
development thereof, except as set forth in Section 2.5(d) below. To the extent
that Bio-Rad has or will have any rights in or to such Glyko Intellectual
Property, Bio-Rad agrees to assign to Glyko, and hereby does assign to Glyko,
all such rights. Bio-Rad shall, and shall cause its personnel to, execute such
additional documents as Glyko may reasonably request to evidence and perfect the
foregoing assignment.
(c) Improvements; License to Bio-Rad. In the event that Glyko
is obligated to perform, and Bio-Rad is obligated to pay and/or reimburse Glyko
for, Improvements under Section 2.2 above, Bio-Rad shall have a
non-transferable, non-exclusive, royalty-free license, without a right of
sublicense, to make, use and sell such Improvements (but not the underlying FACE
Kits or FACE Hardware) in conjunction with Bio-Rad's products.
(d) Bio-Rad. Bio-Rad shall be the sole owner of (i) all
Bio-Rad trademarks and artwork provided to Glyko with respect to Cosmetic
Modifications, (ii) any discovery or invention for which Bio-Rad has obtained a
license from any third party and (iii) any discovery or invention made by
Bio-Rad without use of or reference to Glyko's Confidential Information. To the
extent that Glyko has or will have any rights in or to such Bio-Rad Intellectual
Property, Glyko agrees to assign to Bio-Rad, and hereby does assign to Bio-Rad,
all such rights. Glyko shall, and shall cause its personnel to, execute such
additional documents as Bio-Rad may reasonably request to evidence and perfect
the foregoing assignment. Any such discovery or invention by Bio-Rad may be
incorporated in the Modified FACE Products.
(e) No License. Except as expressly set forth herein, nothing
in this Agreement shall grant any rights to either party under any patent, trade
secret, copyright or trademark of the other party.
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<PAGE> 5
2.6 License Agreement. Glyko agrees to provide to Bio-Rad a separate
License Agreement to include a non-transferable, non-exclusive license to make,
use and sell the FACE Kits and the FACE Hardware as covered in this Agreement
and as covered in the Glyko patents but with the specific exclusion of the
Enzymes either alone or as components of FACE Kits ("License Agreement").
3. MARKETING OF MODIFIED FACE PRODUCTS AND FACE CAPILLARY
ELECTROPHORESIS REAGENTS
3.1 Field. Bio-Rad shall market, advertise, promote, distribute and
sell the Modified FACE Products and Capillary Electrophoresis Reagents worldwide
to customers, solely within the Field. Bio-Rad shall use its reasonable efforts
to promote the sales of the Modified FACE Products and Capillary Electrophoresis
Reagents within the Field.
3.2 Launch. The initial market launch of the Modified FACE Products
(the "Initial Launch") XXXXXXXXXXXXXXXXXX (the "Initial Launch Date"). With
respect to the Initial Launch, Bio-Rad shall expend an effort that is
commensurate with the effort it expends in its initial market launches of other
comparable electrophoresis products of similar market potential. Without
limiting the generality of the foregoing, Bio-Rad shall include the Modified
FACE Products in its promotional materials, giving such Products reasonable
weight and space which is commensurate with the weight and space given to other
comparable electrophoresis products, of similar market, not supplied by Glyko.
3.3 Sales Training. Upon Bio-Rad's invitation, and subject to Glyko's
availability, Glyko shall participate in a reasonable amount of Bio-Rad sales
meetings and other occasions for sales training on the Glyko products. In
addition, XXXXXXXXXXXXXXXXXXXXX after the Effective Date, for a period not to
exceed XXXXXXXXXXXXXX, Glyko shall provide initial sales training on the
Modified FACE Products to XXXXXXXXXXXXXXXXXXX of Bio-Rad employees.
4. SUPPLY
4.1 Obligation. Glyko agrees to use all reasonable commercial efforts
to supply to Bio-Rad the Modified FACE Products, Capillary Electrophoresis
Reagents and Third Party Products under the terms and conditions of this
Agreement. Glyko shall use all reasonable commercial efforts to fill Bio-Rad's
orders when requested; provided that Bio-Rad has submitted such orders
XXXXXXXXXXXXXXXX or more before the requested delivery date. With respect to
Third Party Products, Glyko shall install third party optical disk drives,
imager interface cards and the FACE software on third party computers and shall
perform system level quality control testing on such computers before filling
Bio-Rad's orders.
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<PAGE> 6
4.2 Terms and Conditions of Sale.
(a) Terms and Conditions. All orders of Modified FACE
Products, Capillary Electrophoresis Reagents and Third Party Products shall be
subject to the terms and conditions of this Agreement. Nothing contained in any
purchase order shall in any way modify such terms and conditions or add any
additional terms or conditions.
(b) Prices. The price to Bio-Rad for the Modified FACE
Products shall be the percentage off of Glyko's published retail price for such
products set forth in Exhibit B hereto; provided, that (i) with respect to
Modified FACE Products which are the subject of Improvements, the price for such
Modified FACE Products shall be as set forth in the applicable Estimate, and
(ii) the price to Bio-Rad for the XXXXXXXXXXXXXXXXXXXX shall be equal
to XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Glyko shall give Bio-Rad XXXXXXXXXXXXXXX notice of any price changes.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(c) Price Adjustment
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(d)XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
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<PAGE> 7
(e) Minimum Purchase Guarantee. During each calendar quarter
of this Agreement, Bio-Rad shall be obligated to submit to Glyko in each quarter
(each a "Quarterly Commitment"), orders for the cumulative purchase prices of
Modified FACE Products and Capillary Electrophoresis Reagents set forth in
Exhibit C hereto. The foregoing shall be subject, however, to the condition that
the dates set forth in Exhibit C hereto shall all be extended by one day for
each day that Glyko delays the Initial Launch Date, except for Glyko delays
caused by Glyko's making Improvements. If at any time Bio-Rad fails to meet its
Quarterly Commitment in any given quarter, then Glyko shall have the right to
terminate this Agreement; XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Glyko shall
exercise its right to terminate this Agreement under this Section 4.2(e) (and
not withstanding Section 9.2) as follows: Glyko shall give Bio-Rad written
notice that if Bio-Rad's default is not cured by payment in full (or other
arrangement agreed to in writing by Glyko) within thirty (30) days this
Agreement shall be terminated. If Glyko gives such notice and Bio-Rad does not
cure the default during such thirty-day period, then this Agreement shall
automatically terminate at the end of that period.
(f) Adjustment of Minimums.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(g) Taxes. Purchase prices do not include any federal, state
or local excise, sales, use, value added or similar taxes that may be
applicable. When Glyko has the legal obligation to collect such taxes, the
appropriate amount shall be added to Bio-Rad's invoice and paid by Bio-Rad
unless Bio-Rad provides Glyko with a valid tax exemption certificate authorized
by the appropriate taxing authority.
(h) Order and Acceptance. All orders submitted under this
Agreement shall be initiated by written orders sent to Glyko (including by
facsimile) and requesting a delivery date within forty-five (45) days of such
order and during the term of this Agreement; provided, however, that an order
may initially be placed orally if confirmed in writing (including by facsimile).
Such orders shall be deemed accepted unless rejected by Glyko in writing within
five days.
(i) Payment. Glyko shall submit an invoice to Bio-Rad for each
shipment hereunder. Payment shall be made in full within thirty (30) days of the
date of invoice.
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<PAGE> 8
(j) Shipping. All products delivered pursuant to the terms of
this Agreement shall be marked for shipment to Bio-Rad's address set forth
above, and delivered F.O.B. shipping point, at which time risk of loss shall
pass to Bio-Rad. Unless otherwise instructed in writing by Bio-Rad, Glyko shall
select the carrier. All freight, insurance, and other shipping expenses shall be
borne by Bio-Rad. Any such expenses paid by Glyko shall be added to Bio-Rad's
invoice and paid by Bio-Rad.
4.3 Warranties.
(a) Warranty. Glyko warrants that the Modified FACE Products
and Capillary Electrophoresis Reagents supplied by it hereunder shall (i) be
merchantable, (ii) be free from defects in workmanship and (iii) comply with its
published specifications until the expiration date indicated on its package,
inserts or labels; provided, that the foregoing warranty shall not extend to any
failure to comply with published specifications that is caused by Cosmetic
Modifications. In the event of breach of the foregoing warranty, Glyko's
liability and Bio-Rad's remedy shall be limited to replacement of the defective
product by Glyko.
(b) Disclaimer. GLYKO MAKES NO OTHER WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, WITH RESPECT TO THE PRODUCTS SUPPLIED BY IT HEREUNDER,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
(c) Warranty Procedures. Bio-Rad shall follow the reasonable
warranty procedures of Glyko.
5. TECHNOLOGY ACCESS
5.1 Future Products. Any and all future models of the FACE Hardware and
FACE Kits (including without limitation the precast gels contained in such FACE
Kits) developed by Glyko shall, at Bio-Rad's option, be available for
modification and supply by Glyko to Bio-Rad in accordance with the terms and
conditions of this Agreement. The price to Bio-Rad for supplied future Modified
FACE Products, except Modified FACE Products which are the subject of
Improvements, shall be at the same discount of off Glyko's published retail
price for such products as the discounts set forth in Exhibit B hereto with
respect to the current models of such products. Any such future model Modified
FACE Products purchased by Bio-Rad hereunder shall count towards the Quarterly
Commitments set forth in Section 4.2(e) above.
5.2 Fee. In consideration for the rights granted to it under Sections
2.6 and 5.1 above, Bio-Rad shall pay to Glyko, on the Effective Date the sum of
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
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5.3
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
6. TRAINING AND TECHNICAL SUPPORT
6.1 Training by Glyko. On the Effective Date, Bio-Rad shall designate
one or more qualified individual(s) to be its expert(s) in Carbohydrate
Analysis. XXXXXXXXXXXXXXXXXXXXXX of the Effective Date, Glyko shall provide,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, each day of seven hours or more, up to
XXXXXXXXXXXXXXXXXX of training to such individual(s) in the technical aspects of
the Modified FACE Products and Capillary Electrophoresis Reagents, pursuant to
such schedule and at such locations as the parties shall mutually agree. The
parties shall each bear their own expenses in connection with such training. The
designated Bio-Rad individual(s) shall be responsible for the technical training
of other personnel within the Bio-Rad organization. Glyko shall provide a
reasonable amount of additional training to Bio-Rad personnel, as requested by
Bio-Rad and subject to the reasonable availability of Glyko personnel and
resources, provided that Bio-Rad shall reimburse Glyko
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX and reasonable travel and living expenses of
Glyko personnel in providing such training.
6.2 Technical Support of Customers. Bio-Rad shall provide front-line
technical support with respect to the Modified FACE Products and Capillary
Electrophoresis Reagents to its customers. Glyko shall provide Bio-Rad, without
additional charge, a reasonable amount of back-up support concerning technical
aspects and use of the Modified FACE Products and Capillary Electrophoresis
Reagents as reasonably necessary in order for Bio-Rad to provide support to its
customers. Such back-up support shall consist of telephone consultation to
Bio-Rad with respect to any customer questions regarding the Modified FACE
Products and Capillary Electrophoresis Reagents which Bio-Rad cannot adequately
answer.
7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Glyko. Glyko represents and
warrants that each of the following statements is true, correct and complete:
(a) Existence and Rights. Glyko is a corporation duly
organized and validly existing under the laws of the State of Delaware, and has
all requisite corporate power and authority to carry out this Agreement and the
transactions contemplated hereby.
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<PAGE> 10
(b) Authorization. The execution, delivery and performance of
this Agreement by Glyko has been duly authorized by all necessary corporate
action and does not require notice to, or the consent or approval of, any
governmental body or other regulatory authority. This Agreement has been duly
executed and delivered. This Agreement constitutes a legal, valid and binding
obligation of Glyko, enforceable in accordance with its terms, except (i) as
enforceability may be limited by bankruptcy, insolvency, reorganization or
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) the availability or equitable remedies may be limited by
equitable principles of general applicability.
(c) No Conflict. The execution, delivery and performance of
this Agreement by Glyko 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 provision of the Articles of Incorporation or Bylaws of
Glyko, nor violate any material law or regulation of any court, governmental
body or administrative or other agency having jurisdiction over it.
(d) No Infringement. As of the Effective Date, the sale by
Bio-Rad of the Modified FACE Products and Capillary Electrophoresis Reagents
does not infringe the patents, copyrights, or trade secrets of any third party
for which a license has not been obtained. Bio-Rad's exclusive remedy, and
Glyko's sole obligation, with respect to a breach by Glyko of its warranty set
forth in this Section 7.1(d) shall be Glyko's intellectual property indemnity
set forth in Section 8.1 below.
7.2 Representations and Warranties of Bio-Rad. Bio-Rad represents and
warrants that each of the following statements is true, correct and complete:
(a) Existence and Rights. Bio-Rad is a corporation duly
organized and validly existing under the laws of Delaware, and has all requisite
corporate power and authority to carry out this Agreement and the transactions
contemplated hereby.
(b) Authorization. The execution, delivery and performance of
this Agreement by Bio-Rad has been duly authorized by all necessary corporate
action and does not require notice to, or the consent or approval of, any
governmental body or other regulatory authority. This Agreement has been duly
executed and delivered. This Agreement constitutes a legal, valid and binding
obligation of Bio-Rad, enforceable in accordance with its terms, except (i) as
enforceability may be limited by bankruptcy, insolvency, reorganization or
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) the availability or equitable remedies may be limited by
equitable principles of general applicability.
(c) No Conflict. The execution, delivery and performance of
this Agreement by Bio-Rad 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 provision of the Articles of Incorporation or Bylaws of
Bio-Rad, nor violate any material law or regulation of any court, governmental
body or administrative or other agency having jurisdiction over it.
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<PAGE> 11
8. INDEMNITIES AND INSURANCE
8.1 Glyko Intellectual Property Indemnity
(a) Obligation. Bio-Rad agrees that Glyko has the right to
defend, or at its option to settle, and Glyko agrees, at its own expense, to
defend or at its option to settle, any claim, suit or proceeding brought against
Bio-Rad or its customer on the issue of infringement of any patent, copyright,
trademark or other intellectual property right by the Modified FACE Products and
Capillary Electrophoresis Reagents, which is not covered by the provisions of
Section 8.2(ii) below, subject to the limitations hereinafter set forth. Glyko
shall have sole control of any action or settlement negotiations, and Glyko
agrees to pay, subject to the limitations hereinafter set forth, any settlement
or final judgment entered against Bio-Rad or its customer including costs, and
attorneys' fees awarded, on such issue in any such suit or proceeding defended
by Glyko. Bio-Rad shall notify Glyko promptly in writing upon becoming aware of
such claim, suit or proceeding and give Glyko authority to proceed as
contemplated herein, and, at Glyko's expense, give Glyko proper and full
information and assistance to settle and/or defend any such claim, suit or
proceeding. If the Modified FACE Products or any part thereof, are, or in the
opinion of Glyko may become, the subject of any claim, suit or proceeding for
infringement of any such patent, copyright, trademark or other intellectual
property right, or if it is adjudicatively determined that the Modified FACE
Products, or any part thereof, infringe any such patent, copyright, trademark or
other intellectual property right, or if the distribution or use of the Modified
FACE Products, or any part thereof, is, as a result, enjoined, then Glyko may,
at its option and expense:
(i) procure for Bio-Rad the right under such patent,
copyright, trademark or other intellectual property right to continue to
distribute or use, as appropriate, the Modified FACE Products or such part
thereof; or
(ii) replace the Modified FACE Products, or part
thereof, with other suitable products or parts; or
(iii) suitably modify the Modified FACE Products, or
part thereof; or
(iv) if none of the foregoing alternatives is
reasonably practicable, terminate this Agreement with respect to the Modified
FACE Products.
(b) Limitations. Notwithstanding the provisions of Section
8.1(a) above, Glyko assumes no liability for:
(i) any infringement claims with respect to any
product in or with which any of the Modified FACE Products may be used but not
covering the Modified FACE Products standing alone;
(ii) any trademark infringements involving any
marking or branding not applied by Glyko; or
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<PAGE> 12
(iii) the modification of the Modified FACE Products,
or any part thereof, unless such modification was made by Glyko.
(c) Entire Liability. THE FOREGOING PROVISIONS OF THIS SECTION
8.1 STATE THE ENTIRE LIABILITY AND OBLIGATION OF GLYKO AND THE EXCLUSIVE REMEDY
OF BIO-RAD WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, TRADEMARKS OR
OTHER INTELLECTUAL PROPERTY RIGHTS BY THE MODIFIED FACE PRODUCTS OR ANY PART
THEREOF.
(d) Notification of Infringement. Bio-Rad shall promptly
notify Glyko in writing upon its discovery of any unauthorized use or
infringement of the Modified FACE Products or Glyko's patent, copyright,
trademark or other intellectual property rights with respect thereto. Glyko
shall have the sole and exclusive right to bring an infringement action or
proceeding against a third party, and, in the event that Glyko brings such an
action or proceeding, Bio-Rad shall cooperate and provide full information and
assistance to Glyko and its counsel in connection with any such action or
proceeding.
8.2 Bio-Rad Product Liability and Intellectual Property Indemnity.
Glyko agrees that Bio-Rad has the right to defend, or at its option to settle,
and Bio-Rad agrees, at its own expense, to defend or at its option to settle,
any claim, suit or proceeding brought against Glyko or its customer (i) for
personal injury or property damage resulting from the manufacture, use or sale
of the Modified FACE Products and Capillary Electrophoresis Reagents or (ii) on
the issue of infringement of any copyright, trademark or other intellectual
property right by any trademarks and artwork provided by Bio-Rad to Glyko, both
subject to the limitations hereinafter set forth. Bio-Rad shall have sole
control of any action or settlement negotiations, and Bio-Rad agrees to pay,
subject to the limitations hereinafter set forth, any settlement or final
judgment entered against Glyko or its customer, including costs and attorneys'
fees awarded in any such suit or proceeding defended by Bio-Rad. Glyko shall
notify Bio-Rad promptly in writing upon becoming aware of such claim, suit or
proceeding and shall give Bio-Rad authority to proceed as contemplated herein,
and, at Bio-Rad's expense, give Bio-Rad proper and full information and
assistance to settle and/or defend any such claim, suit or proceeding. In the
event that it is adjudicatively determined that any Modified FACE Product or
Capillary Electrophoresis Reagents was the sole cause or a cause of any personal
injury or property damage in any such claim, suit or proceeding, then Glyko
shall reimburse Bio-Rad for the amount of the judgment attributable to such
cause including its reasonable legal expenses.
9. TERM AND TERMINATION
9.1 Term and Extension.
(a) Term. This Agreement shall commence on the Effective Date
and shall continue in force and effect up to and including December 31, 1997,
unless terminated earlier under the provisions of this Section 9.
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<PAGE> 13
(b) Extension. This Agreement shall be extended for additional
one (1) year terms provided that Bio-Rad has met all Quarterly Commitments as
described in Section 4.2(e) and provided that Bio-Rad pays the Fee (if still in
effect according to Sections 5.2 and 5.3). The additional one year terms shall
have Quarterly Commitments of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
9.2 Termination for Material Default. If either party defaults in the
performance of any material provision of this Agreement, then the nondefaulting
party may give written notice to the defaulting party that if the default is not
cured within XXXXXXXXXXXXXXXX the Agreement shall be terminated. If the
nondefaulting party gives such notice and the default is not cured during
XXXXXXXXXXXXXX period, then the Agreement and the License Agreement (as defined
in Section 2.6) shall automatically terminate at the end of that period.
9.3 Termination for Convenience. Bio-Rad shall have the right to
terminate this Agreement for any reason or no reason, by giving Glyko
XXXXXXXXXXXXXXXXX prior written notice thereof: provided, that the License
Agreement (as defined in Section 2.6) shall automatically terminate upon such
termination by Bio-Rad.
9.4 Fulfillment of Orders upon Termination. Upon termination or
expiration of this Agreement, Glyko shall be obligated to fulfill, subject to
the terms of Section 4 above and subject to Glyko's right to require prepayment,
all orders accepted by Glyko prior to the date of termination.
9.5 Survival of Certain Terms. The provisions of Sections 2.5(a), (b)
and (d), 4.3, 7, 8, 10 and 12 shall survive the expiration or termination of
this Agreement for any reason.
10. CONFIDENTIALITY
10.1 Obligation. All confidential or proprietary information disclosed
in writing or, if disclosed orally, confirmed in writing as being confidential
within XXXXXXXXXXXXXXXX after the initial disclosure ("Confidential
Information"), furnished by either party (the "Disclosing Party") to the other
party (the "Receiving Party") or its representatives, shall be held in
confidence by the Receiving Party using the same degree of care that it uses to
protect its own confidential or proprietary information, but in no event less
than reasonable care, and shall not be disclosed by the Receiving Party to any
third party, except to a third party who is required to have access to such
Confidential Information in order to carry out the Receiving Party's obligations
under this Agreement, which third party shall sign a non-use and non-disclosure
agreement in content similar to the provisions hereof, prior to any disclosure
of Confidential Information to such third party. The Receiving Party shall not
use the Confidential Information of the Disclosing Party for any purpose except
as necessary to exercise its rights and fulfill its obligations under this
Agreement. In the event of expiration or termination of this Agreement, the
Receiving Party and its representatives shall return to the Disclosing Party all
originals and all copies of the Confidential Information of the Disclosing
Party, shall retain no such Confidential Information in its files (except for an
archival copy retained solely for its legal records), and shall not use to its
commercial advantage any such Confidential Information for a period of
XXXXXXXXXXXXXXX.
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<PAGE> 14
10.2 Exceptions. The foregoing restrictions shall not apply to any
Confidential Information of the Disclosing Party that (i) is in the possession
of the Receiving Party at the time of disclosure, (ii) prior to or after the
time of disclosure becomes part of the public domain, not as a result of any
breach by the Receiving Party, (iii) is developed independently by the Receiving
Party without use of or reference to the Confidential Information of the
Disclosing Party, (iv) is acquired from a third party having the right to
disclose such information, or (v) is approved in writing for release by the
Disclosing Party.
11. PUBLIC ANNOUNCEMENT
Neither party shall have the right to disclose to third parties the
terms of or the existence of this Agreement; provided, that either party shall
have the right to disclose the terms and existence of this Agreement to third
parties as required by securities laws, to prospective investors and to such
party's accountants, attorneys and other professional advisors.
12. MISCELLANEOUS
12.1 Limitation of Liability. EXCEPT FOR ANY DAMAGES ARISING OUT OF A
BREACH BY EITHER PARTY OF SECTION 10 AND EXCEPT FOR EACH PARTY'S LIABILITY UNDER
SECTION 8 AND GLYKO'S FAILURE TO SUPPLY PRODUCTS HEREUNDER, IN NO EVENT SHALL
EITHER PARTY'S LIABILITY ARISING OUT OF THIS AGREEMENT OR THE TERMINATION OF
THIS AGREEMENT EXCEED THE AMOUNTS RECEIVED BY SUCH PARTY FROM THE OTHER PARTY
HEREUNDER. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE PRODUCTS OR SERVICES. IN NO EVENT SHALL EITHER PARTY HAVE ANY
LIABILITY FOR INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT, INCLUDING
BUT NOT LIMITED TO LOSS OF ANTICIPATED PROFITS, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
12.2 Assignment. Neither party may assign this Agreement or any rights
or obligations hereunder, without the prior written consent of the other party,
and any attempted such assignment shall be void; provided, however, either party
may assign this Agreement to an entity that succeeds to all or substantially all
of its business or assets to which this Agreement relates.
12.3 Notices. All notices between the parties shall be in writing and
shall be deemed to have been given if personally delivered or sent by certified
or registered mail (return receipt) or facsimile to the Bio-Rad General Counsel
or the Glyko General Manager at the addresses and facsimile numbers set forth
above, or such other address as is provided by notice as set forth herein.
Notices shall be deemed effective upon receipt or, if delivery is not effected
by reason of some fault of the addressee, when tendered.
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<PAGE> 15
12.4 Governing Law; Forum Selection. This Agreement shall be governed
by the laws of the State of California, as applied to contracts made and to be
performed in California. All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction and venue of the California state courts
and federal courts located in the United States District Court for the Northern
District of California, and the parties consent to the personal and exclusive
jurisdiction of these courts.
12.5 Arbitration. Any dispute or claim arising out Sections 2.1, 4.2(d)
and 9.2 shall be finally settled by binding arbitration in San Francisco,
California under the rules of arbitration of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. Judgment
on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to
any court of competent jurisdiction for injunctive relief without breach of this
arbitration provision.
12.6 Severability. Any term or provision of this Agreement held to be
illegal or unenforceable shall, if possible, be interpreted so as to be
construed as valid, but in any event the validity or enforceability of the
remainder hereof shall not be affected. In such event, the parties agree to
negotiate, in good faith, a legal and enforceable substitute provision which
most nearly effects the parties' intent in entering into this Agreement.
12.7 Force Majeure. Nonperformance of either party shall be excused to
the extent that performance is rendered impossible by strike, fire, flood,
earthquake, governmental acts or orders or restrictions, failure of suppliers,
or any other reason when failure to perform is beyond the control and not caused
by the negligence of the nonperforming party.
12.8 Independent Contractors. The relationship of Glyko and Bio-Rad
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other party for any purpose
whatsoever.
12.9 Waiver. The waiver of, or failure to enforce, any breach or
default hereunder shall not constitute the waiver of any other or subsequent
breach or default.
12.10 Entire Agreement. This Agreement, along with the exhibits
attached hereto and incorporated herein by reference, sets forth the entire
Agreement between the parties and supersedes prior proposals, agreements, and
representations between them, whether written or oral. This Agreement may be
changed only by mutual agreement of the parties in writing.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
BIO-RAD LABORATORIES, INC. GLYKO, INC.
By: __________________________ By: ________________________
Name: ________________________ Name: ______________________
Title: _________________________ Title: _______________________
Exhibit A: Initial Modifications
Exhibit B: Pricing Discounts
Exhibit C: Quarterly Commitments
-16-
<PAGE> 17
EXHIBIT A
INITIAL MODIFICATIONS
1.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
2.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
3.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
-17-
<PAGE> 18
EXHIBIT B
PRICING DISCOUNTS
1. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
2. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
3. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
4. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
-18-
<PAGE> 19
EXHIBIT C
QUARTERLY COMMITMENTS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
-19-
<PAGE> 1
EXHIBIT 10.14
NOTE: The full text of this document has been filed separately with the
Securities and Exchange Commission pursuant to an application for confidential
treatment of the document. In the following material, omitted confidential
information is noted by capital "X's".
INTERNATIONAL DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of September 12, 1995, by and
among Glyko, Inc., ("Glyko"), a corporation having its offices at 81 Digital
Drive, Novato, CA 94949, United States, existing under the laws of California,
Toyobo Co., Ltd. having its offices at 2-8 Dojimahama 2-chome, Kita-ku, Osaka
530, Japan existing under the laws of Japan, ("Toyobo"), and MC Medical, Inc.,
having offices at 22 Daikyo-cho, Shinjuku-ku, Tokyo 160 Japan existing under the
laws of Japan ("MC Medical"), the "party" or "parties", as the case may be.
WITNESSETH:
Whereas, Glyko is engaged in the research, manufacture and sale of biochemical
analytic products including the Products, as defined below;
Whereas, Toyobo and MC Medical each has desired to be appointed as exclusive
distributor for the sale of the Products in the Territory, as defined below;
Whereas, Glyko committed itself to such appointment to each of Toyobo and MC
Medical, and as a result of deliberation among the parties, is willing to put
both Toyobo and MC Medical in a position of prime distributor for the Products;
Whereas, Toyobo and MC Medical desire to cooperate in reducing the logistics
cost for importing the Products from the U.S.A.; and
Whereas, Toyobo and MC Medical further desire to conduct joint sales promotions
for the expansion of the market of the Products.
In consideration of the mutual covenants and conditions herein
contained, and intending to be legally bound hereby, the parties mutually agree
as follows:
1
<PAGE> 2
1. DEFINITIONS
1.1 "Products" mean Glyko FACE(R) (fluorophore-assisted carbohydrate
electrophoresis) analytic products for the analysis of carbohydrates: SE1000
FACE Imager including FACE Analytic Software; SE1000 FACE Workstation; FACE
Carbohydrate Analysis Kits; FACE Carbohydrate Analysis Kits for Capillary
Electrophoresis; Individual Reagent Packs, Standards, Controls, Precast Gels and
Buffers; Enzymes; and Carbohydrate Analytic Services. These Products are
included in the current Glyko Product Description and Price List attached as
Exhibit A.
Toyobo and MC Medical shall not, without the prior written consent of
Glyko, sell, market or distribute any version of any Product other than the
version Glyko shall designate from time to time as its most current version.
1.2 The "Field" means the research and development of biological substances,
and specifically excludes the fields of diagnosis and treatment of disease.
1.3 "Territory" means the country of Japan and includes all purchasers whose
principal place of business is located within the Territory.
1.4 "Co-exclusive" means there will be, at most, two distributors appointed to
represent the Products, i.e. Toyobo and MC Medical.
2. APPOINTMENT OF DISTRIBUTOR
2.1 Glyko hereby appoints Toyobo and MC Medical each as a Co-exclusive
distributor for the sale of the Products within the Field in the Territory
during the term of this Agreement and Toyobo and MC Medical accept appointment,
on all the terms and conditions contained herein. Toyobo and MC Medical shall
use its best efforts to promote and sell the Products to the maximum number of
responsible customers within the Territory.
2.2 Toyobo and MC Medical each shall not solicit orders for any Product from
any prospective purchaser with its principal place of business located outside
the Territory. If Toyobo or MC Medical receives an order for any Product from a
prospective purchaser whose principal place of business is located outside the
Territory, Toyobo or MC Medical shall immediately refer that order to Glyko.
Toyobo and MC Medical shall not accept any such orders. Toyobo and MC Medical
may not deliver or tender (or cause to be delivered or tendered) any Product
outside of the Territory. Toyobo and MC Medical shall not sell any Product to a
purchaser if it knows or has reason to believe that such purchaser intends to
remove that Product from the Territory.
2
<PAGE> 3
3. PRICES AND PAYMENT
3.1 Toyobo shall order Products from Glyko by submitting a written purchase
order identifying the Products ordered, requested delivery date(s) and any
export/import information required to enable Glyko to fill the order. All orders
for Products are subject to acceptance by Glyko. Glyko shall have no liability
to Toyobo or MC Medical with respect to purchase orders which are not accepted;
provided, however, that Glyko will not unreasonably reject any purchase order
for Products which do not require any modifications or additions in order to
meet the specifications of Toyobo or MC Medical or their customers.
3.2 Toyobo's net price for the Glyko manufactured Products shall be determined
by applying the following discounts to Glyko's current Price List (Exhibit A):
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX.
3.3 If a purchase order is accepted in accordance with Section 3.1 above, the
prices for Products covered by such purchase order shall be Glyko's net Toyobo
prices ex works Glyko's facility at Novato, CA 94949 USA, which are in effect on
the date of Glyko's acceptance. Glyko will prepay and add to the invoice all
charges for freight and insurance. Toyobo is responsible for all customs duties,
taxes and any other expenses incurred in connection with furnishing the
Products.
Glyko may from time to time change its prices. Glyko shall give
Toyobo a written notice XXXXXXXXXXXXXXXXXXXXXXXXX prior to any such change;
provided, however, that no price change shall affect purchase orders already
accepted by Glyko prior to the date such price change becomes effective.
3.4 Toyobo and MC Medical each shall be free to establish its own pricing for
Products which it sells to sales channels or customers.
3.5 Orders placed by Toyobo and accepted by Glyko shall not be canceled or
rescheduled unless mutually agreed upon by both parties, except orders may be
canceled if Products are not shipped within XXXXXXXXXXXXXXXX of the original
delivery date of the purchase order. No Product may be returned for any reason
without first obtaining Glyko's prior written consent. Any purchase order may be
canceled or rescheduled without charge (i) if during the term of the Agreement,
within XXXXXXXXXXX calendar days after Glyko's acceptance of such purchase
order, or (ii) if after the term of the Agreement, within XXXXXXXXXXX calendar
days after termination or expiration of the Agreement, as the case may be. Any
purchase order that is canceled or rescheduled by Toyobo after the XXXXXXXXXXX
calendar day period described in the preceding sentence shall be subject to the
greater of (i) a minimum cancellation charge of XXX of price in US Dollars, or
(ii) an amount equal to the actual cost incurred by Glyko.
3
<PAGE> 4
3.6 The ultimate shipment of orders to Toyobo shall be subject to the right
and ability of Glyko to make such sales, and obtain required licenses and
permits, under all decrees, statutes, rules and regulations of the government of
the United States and agencies or instrumentalities thereof presently in effect
or which may be in effect hereafter. Any order which has been accepted by Glyko
but which cannot be fulfilled due to such decrees, statutes, rules and
regulations shall be considered to have been rejected when submitted to Glyko
for acceptance or rejection.
3.7 Toyobo and MC Medical each hereby agrees: (i) to assist Glyko in obtaining
any such required licenses or permits by supplying such documentation or
information as may be requested by Glyko; (ii) to comply with such decrees,
statutes, rules and regulations of the government of the United States and
agencies or instrumentalities thereof; (iii) to maintain the necessary records
to comply with such decrees, statutes, rules and regulations; (iv) not to export
any Products except in compliance with such decrees, statutes, rules and
regulations; (v) to obtain all governmental approvals and licenses necessary to
import the Products into the Territory; (vi) not to sell, transfer or otherwise
dispose of Products in violation of the export laws, rules and regulations of
the United States; and (vii) to indemnify and hold harmless Glyko, its officers,
directors and employees from any and all fines, damages, losses, costs and
expenses (including reasonable attorneys' fees) incurred by Glyko as a result of
any breach of this subsection (3.7) by Toyobo or MC Medical or any of Toyobo or
MC Medical's customers.
3.8 Unless Toyobo requests otherwise, all Products ordered by Toyobo shall be
packed for shipment and storage in accordance with Glyko's standard commercial
practices and shipped directly to Toyobo. It is Toyobo's obligation to notify
Glyko of any special packaging requirements (which shall be at Toyobo's
expense). Title, risk of loss and damage to a Product shall pass to Toyobo upon
the removal of such Products from Glyko's facility.
All claims for non-conforming shipments must be made in writing to
Glyko within ten days of the receipt of the Products in Japan. Any claims not
made within such period shall be deemed waived and released.
3.9 All amounts due and payable with respect to a Product tendered by Glyko in
accordance with Section 3.8 hereof shall be paid in full XXXXXXXXX days after
the receipt by Toyobo of an invoice for the shipment. All such amounts shall be
paid in US Dollars by wire transfer of funds or by other means specified in
writing and mutually agreed by both parties to:
Novato National Bank
Novato Main Office
1525 Grant Avenue
Novato, California 94949-6123
ABA Number: 121-141-097
Bank Account Number:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
4
<PAGE> 5
All costs incurred in connection with such wire transfer shall be the
responsibility of Toyobo. Whenever any amount hereunder is due on a day which is
not a day on which banks in Novato, CA, United States, are open for business (a
"Business Day"), such amount shall be paid on the next such Business Day.
Amounts hereunder shall be considered to be paid as of the day on which funds
are received by Glyko's bank. No part of any amount payable to Glyko hereunder
may be reduced due to any counterclaim, set-off, adjustment or other right which
Toyobo might have or assert against Glyko, any other party or otherwise.
3.10 All amounts due and owing to Glyko hereunder but not paid by Toyobo on
the due date thereof shall bear interest (in US Dollars) at the rate of the
lesser of: (i) XXXXXXXXXXXXXXXXXXXXXXXXXXX above the then applicable prime
interest rate announced by Novato National Bank at 1525 Grant Avenue, Novato, CA
94948-6123, USA, for 90-day loans in US Dollars to prime commercial customers in
USA; or (ii) the maximum lawful interest rate permitted under applicable law.
Such interest shall accrue on the balance of unpaid amounts from time to time
outstanding from the date on which portions of such amounts become due and owing
until payment thereof in full.
3.11 In the event of any discrepancy between any purchase order accepted by
Glyko and this Agreement, the terms of this Agreement shall govern.
3.12 During the term of this Agreement, Glyko agrees not to negotiate any new
supply agreement with OEM customers for the Territory. Toyobo and MC Medical
acknowledge and agree that Glyko has a prior distribution agreement in effect
with another distributor for the Territory, and that this Agreement shall not
affect such prior agreement in any way.
4 PURCHASE GUARANTEE
4.1 Within thirty (30) days of signing this Agreement, Toyobo shall
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
5
<PAGE> 6
5. OTHER OBLIGATIONS OF TOYOBO AND MC MEDICAL
5.1 Toyobo and MC Medical each shall develop a program for the promotion and
sale of the Products within the Territory including sales forecasts and
marketing strategies. Toyobo and MC Medical each may send one or more
technically competent sales representatives to Glyko's facility for training on
the Products. This training will be provided at Glyko's expense; however, the
salaries, travel and living expenses for the Toyobo or MC Medical personnel to
be trained shall be at the expense of Toyobo and MC Medical, respectively.
5.2 Toyobo and MC Medical each shall employ competent and experienced
technical and service personnel, provide appropriate service shop facilities,
and maintain an adequate stock of spare parts so as to render prompt and
adequate service to the users of the Products in the Territory. Toyobo and MC
Medical each will maintain copies of technical service records and from time to
time allow Glyko access to these records solely for the purpose of assuring
Glyko that adequate customer assistance and technical support are being provided
to customers.
5.3 Toyobo and MC Medical each may translate, at its own expense, any user
and technical manuals and advertising and marketing information with respect to
the Products into the languages of its customers and provide Glyko with copies
of all such materials for review by Glyko. Toyobo and MC Medical each shall
assign all copyrights in such translations to Glyko. Glyko shall not be liable
for translation errors made by Toyobo and MC Medical or at Toyobo's or MC
Medical's direction or for the non-conformance of such translated materials with
laws and regulations in force from time to time in the Territory. Toyobo and MC
Medical shall indemnify and hold Glyko harmless to the extent that a third party
brings claims against Glyko based on such errors or non-conformance.
6. GLYKO'S OBLIGATIONS
6.1 Glyko shall provide Toyobo and MC Medical each such marketing and
technical literature and Product samples as Glyko may in its discretion consider
necessary to assist with the promotion of the Products. Glyko will provide
customer sales leads in the Territory as they arise from Glyko's marketing
activities.
6.2 Glyko shall provide training at its facility in Novato, California to
Toyobo's and MC Medical's personnel in connection with the marketing, sale,
installation, maintenance and support of the Products; provided, however, that
Glyko's personnel spend no more than an aggregate of XXXXXXXXXXXXXXXX of their
time in providing such training.
6
<PAGE> 7
6.3 Glyko reserves the right at any time to make changes in the design of and
to add improvements to any Product or to discontinue the manufacture of any
particular Product. All such changes, additions and discontinuances shall be
made with a minimum of XXXXXXXXXXXXXXXX prior written notice to Toyobo and MC
Medical unless the circumstances are beyond Glyko's control. If Glyko announces
a revised version of any Product and as a consequence of such announcement
Toyobo and MC Medical each is prohibited by virtue of Section 1.1 above from
marketing the previous version of such Product, Glyko shall supply to Toyobo and
MC Medical each without charge such information and additional components as
shall permit Toyobo and MC Medical each to modify its inventory so that such
inventory will be functionally equivalent to the revised version of the Product.
The said information and additional components for the conversion of an up-dated
version shall also be supplied by Glyko to Toyobo and MC Medical each at
reasonable prices, for the purpose of the sale to their respective existing
customers upon request.
7. SOFTWARE LICENSE
7.1 The Products include the following software programs in object code form
only (hereinafter referred to as the "Software"): Glyko FACE Analytic Software
is a Windows based program that manages the operation of the FACE Imager,
acquires the gel image and performs the analysis of the gel image.
For the purposes of this Section, (i) "End-User Customer" shall mean
a customer of Toyobo or MC Medical which purchases Products incorporating the
Software or any part thereof; and (ii) "End-User Sublicense Agreement" shall
mean the agreement between the End-User Customer and Toyobo or MC Medical which
is required by Section 7.4.
7.2 Glyko hereby grants to Toyobo and MC Medical each a non-exclusive and
non-transferable license, without the right to sublicense (except as is provided
in Section 7.4), in the Territory during the term of this Agreement to use the
Software and related documentation provided by Glyko solely for their internal
use in connection with the sale and promotion of the Products. Toyobo and MC
Medical each shall not disclose, furnish, transfer or otherwise make available
the Software or any portion thereof or related documentation provided by Glyko
in any form to any third party (other than to an End-User Customer pursuant to
Section 7.4) and, except as permitted in Section 7.5, shall not duplicate the
Software or any part thereof or any such related documentation.
7.3 Title to and ownership of any and all proprietary rights in or related to
the Software, related documentation provided by Glyko and all partial or
complete copies of such Software and related documentation permitted to be made
hereunder or under End-User Sublicense Agreements shall at all times remain with
Glyko or its licensors. This Agreement and End-User Sublicense Agreements shall
not be construed as a sale of any rights in the Software, related documentation
provided by Glyko, any copies thereof or any part thereof. All references in
this Agreement to sale, resale or purchase of the Products, or references of
like effect, shall, with respect to the Software and related documentation
provided by Glyko, mean licenses or sublicenses of the Software and such related
documentation pursuant to Sections 7.2 or 7.4. All references in this Agreement
to purchasers of the Products, or references of like effect, shall, with respect
to the Software and related documentation provided by Glyko, mean Toyobo and MC
Medical each as a licensee or sublicensees of the Software and such related
documentation who have entered into End-User Sublicense Agreements pursuant to
this Section 7.3.
7
<PAGE> 8
7.4 Toyobo and MC Medical each has a non-exclusive right to sublicense
solely to End-User Customers the Software, related documentation provided by
Glyko or any part thereof for use only in conjunction with the Products. Prior
to delivery of the Software, such related documentation or any part thereof to
an End-User Customer, such End-User Customer shall execute Glyko's then current
end-user sublicense agreement, the current version of which is attached hereto
as Exhibit B. Any attempt to transfer or assign the Software, such related
documentation, any copies thereof or any part thereof shall be null and void
(except for sublicenses in accordance with this Section 7.4).
7.5 The Software and related documentation provided by Glyko pursuant to
this Agreement may be copied or reproduced by Toyobo and MC Medical, in whole or
in part, for their internal use only in connection with the sale and promotion
of the Products. No more than one copy in any form shall be in existence of the
Software, such related documentation or any part thereof (and in the possession
of Toyobo and MC Medical ) at any time without the prior written consent of
Glyko, other than (i) copies of the Software resident in Products themselves;
(ii) one copy of the Software created solely for archival and/or restart
purposes; and (iii) copies of the Software and related documentation designated
for delivery to specific End-User Customers, which copies are governed by
End-User Sublicense Agreements already executed by such End-User Customers.
Glyko provides no installation or warranty for copies of the Software made by
Toyobo or MC Medical, unless otherwise agreed by Glyko in writing.
7.6 Toyobo and MC Medical each shall not disassemble, decompile or reverse
engineer the Software or any part thereof.
7.7 Toyobo and MC Medical each shall maintain records specifically
identifying each copy of the Software, related documentation provided by Glyko
or any part thereof and the associated Products delivered pursuant to this
Agreement to End-User Customers, and shall make such records available to Glyko
during regular business hours upon reasonable notice for purpose of enforcement
of the terms and conditions of this Section. Glyko shall have the right, on
reasonable advance notice to Toyobo and/or MC Medical, to inspect their places
of business to ensure their compliance with the provisions of this Section.
7.8 IF THE SOFTWARE OR ANY PART THEREOF BECOMES, OR IN GLYKO'S OPINION IS
LIKELY TO BECOME, THE SUBJECT OF A CLAIM OF INFRINGEMENT OF A PATENT OR
COPYRIGHT OF A THIRD PARTY, TOYOBO AND MC MEDICAL EACH SHALL PERMIT GLYKO, AT
ITS OPTION AND EXPENSE, (I) TO PROCURE FOR TOYOBO AND MC MEDICAL AND ITS
END-USER CUSTOMERS THE RIGHT TO CONTINUE USING SUCH SOFTWARE, (II) TO REPLACE OR
MODIFY SUCH SOFTWARE SO THAT IT BECOMES NON-INFRINGING, OR (III) TO GRANT TOYOBO
AND MC MEDICAL EACH A REFUND FOR SUCH SOFTWARE. GLYKO'S PERFORMANCE OF ONE OF
THE PRECEDING ALTERNATIVES SET FORTH IN CLAUSE (I), (II) OR (III) ABOVE SHALL
CONSTITUTE FULL AND COMPLETE SATISFACTION OF ANY AND ALL CLAIMS TOYOBO AND MC
MEDICAL EACH MIGHT HAVE AGAINST GLYKO ARISING FROM SUCH INFRINGEMENT.
8
<PAGE> 9
7.9 GLYKO SHALL HAVE NO LIABILITY TO TOYOBO OR MC MEDICAL OR ITS END-USER
CUSTOMERS WITH RESPECT TO ANY CLAIM OF PATENT OR COPYRIGHT INFRINGEMENT TO THE
EXTENT SUCH CLAIM IS BASED UPON (I) USE OF A PRODUCT IN COMBINATION WITH ANY
SOFTWARE, HARDWARE, MACHINE OR OTHER DEVICE NOT PROVIDED BY GLYKO WHERE SUCH
PRODUCT WOULD NOT BY ITSELF SO INFRINGE, (II) CHANGES OR MODIFICATIONS TO A
PRODUCT NOT MADE OR AUTHORIZED IN WRITING BY GLYKO, (III) ANY CLAIM OF
INFRINGEMENT OF ANY PATENT OR COPYRIGHT IN WHICH TOYOBO OR MC MEDICAL EACH OR
ANY OF ITS AFFILIATES HAS AN INTEREST, OR (IV) USE OF A PRODUCT IN A MANNER FOR
WHICH IT WAS NOT DESIGNED.
7.10 Toyobo and MC Medical each shall retain and shall not alter or obscure any
notices, markings or other insignia which are affixed to the Software, related
documentation provided by Glyko or any part thereof at the time of delivery of
such Software or such related documentation by Glyko. To the extent that Toyobo
and MC Medical are allowed to make copies of the Software, such related
documentation or any part thereof pursuant to Section 7.5, Toyobo and MC Medical
each agrees to reproduce and include such notices, markings and insignia on all
such copies.
8. RELATIONSHIP OF THE PARTIES
8.1 Toyobo and MC Medical each shall be considered to be an independent
contractor. The relationship between Glyko and Toyobo and MC Medical shall not
be construed to be that of employer and employee, nor to constitute a
partnership, joint venture or agency of any kind.
8.2 Toyobo and MC Medical each shall pay all of its expenses, including without
limitation all travel, lodging and entertainment expenses, incurred in
connection with its services hereunder. Glyko shall not reimburse Toyobo or MC
Medical for any of those expenses.
8.3 Toyobo and MC Medical shall have no right to enter into any contracts or
commitments in the name of, or on behalf of, Glyko, or to bind Glyko in any
respect whatsoever.
8.4 In addition, Toyobo and MC Medical shall not obligate or purport to
obligate Glyko by issuing or making any affirmations, representations,
warranties or guaranties with respect to Products to any third party, other
than the warranties described in Exhibit C attached hereto and made a part
hereof.
9
<PAGE> 10
9. REPORTS
Toyobo and MC Medical each shall provide Glyko with written quarterly
reports XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
10. TRADEMARKS AND TRADE NAMES
10.1 Toyobo and MC Medical each may use Glyko's trademarks, service marks and
trade names listed below (hereinafter referred to as the "Trademarks") on a
non-exclusive basis in the Territory only for the duration of this Agreement and
solely for display or advertising purposes in connection with selling and
distributing the Products in accordance with this Agreement:
GLYKO(R) AND FACE(R) (FLUOROPHORE ASSISTED CARBOHYDRATE ELECTROPHORESIS)
Toyobo and MC Medical each shall not at any time do or permit any act
to be done which may in any way impair the rights of Glyko in the Trademarks.
All Trademarks shall be and remain the sole property of Glyko. Except as
otherwise provided in this Agreement, Toyobo and MC Medical each acknowledges
and agrees that it neither has nor is acquiring hereby, any license, concession,
rights of use or any other right, title or interest in or to any trademarks,
trade names, patents, developments, specifications, techniques and other
proprietary and confidential information relating to the Products or which serve
to distinguish the Products.
10.2 Toyobo and MC Medical each shall: (i) use the Trademarks in compliance
with all relevant laws and regulations; (ii) accord Glyko the right to inspect
during normal business hours Toyobo's and MC Medical's facilities used in
connection with efforts to sell Products in order to confirm that Toyobo's and
MC Medical's use of such Trademarks is in compliance with this Section; and
(iii) not modify any of the Trademarks in any way and not use any of the
Trademarks on or in connection with any goods or services other than the
Products.
10.3 Toyobo and MC Medical each shall promptly notify Glyko of any infringement
or use by others of any word, name, title or expression which so nearly
resembles the Trademark as to likely cause confusion or uncertainty in the
public at large.
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<PAGE> 11
10.4 Glyko agrees to defend, indemnify and hold Toyobo and MC Medical harmless
from and against any claims, suits or liability arising out of any claim that
the marketing, advertising and/or sale or use by Toyobo and MC Medical or their
customers of the Products under trade name or trademarks designated or used by
Glyko infringes on any trademark, trade name or proprietary or other interest of
any third party in the Territory. Glyko reserves the right to change its
trademarks or tradenames during the course of this Agreement if Glyko deems it
reasonable on the basis of any such claim or potential claim of infringement.
11. COVENANT NOT TO COMPETE
During the term of this Agreement, Toyobo and MC Medical each shall not
market directly or indirectly in the Territory products which are competitive
with the Products without the consent of Glyko. Toyobo and MC Medical represent
and warrant that each currently does not market products which compete with the
Products.
12. LIMITED WARRANTY
12.1 As to all components of the Products manufactured by Glyko, Glyko makes
the warranties set forth in Exhibit C, attached hereto and made a part hereof.
As to all components of the Products manufactured by any entity other than
Glyko, Glyko extends to Toyobo the warranties as to such components provided by
such other entity to Glyko for the length of time that such warranty remains
valid for Glyko. The time and scope of the warranties described in Exhibit C
shall not exceed the time and scope of any warranties granted by Toyobo and MC
Medical to any purchaser of such Product.
12.2 Under no circumstances shall the warranties set forth in Exhibit C apply
to any Product which has been used with unapproved assemblies or sub-assemblies
or to any Product which has been customized or modified, damaged or misused.
Notwithstanding any other provision in this Agreement, Glyko shall not be held
responsible for any damage which may result from a defective part except for the
replacement of such part as set forth in Exhibit C.
12.3 Toyobo and MC Medical each accept the current version of the FACE software
"as is" without additional warranties except as provided by Glyko to its
customers (Exhibit C).
12.4 THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF ANY OTHER
WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE).
13. LIMITATIONS ON LIABILITY
13.1 GLYKO'S LIABILITY ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLYING OF THE
PRODUCTS OR THEIR USE OR DISPOSITION, WHETHER BASED UPON WARRANTY, CONTRACT,
TORT OR OTHERWISE, SHALL NOT EXCEED THE ACTUAL PURCHASE PRICE PAID BY TOYOBO FOR
THE PRODUCTS.
11
<PAGE> 12
13.2 IN NO EVENT SHALL GLYKO BE LIABLE TO TOYOBO OR MC MEDICAL FOR SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF
PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES) ARISING OUT OF THE MANUFACTURE,
SALE OR SUPPLYING OF THE PRODUCTS, EVEN IF GLYKO HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES OR LOSSES.
13.3 Claims - Glyko shall indemnify and hold Toyobo and MC Medical harmless
from and against all claims, liabilities, costs and expenses arising out of a
claim that the manufacture, sale or use of the Products violates or infringes on
a third party patent or other intellectual property right in the Territory or a
claim that any defect in the Products caused sickness, disease or death or
damage to properties directly resulting from negligence on the part of Glyko
except to the extent that such claim is based on modification or alteration of
the Products that is not part of Glyko's design.
14. TERM AND TERMINATION
14.1 The term of this Agreement shall begin on the later of the dates that (i)
Glyko executes this Agreement and (ii) Toyobo and MC Medical each executes this
Agreement (the "Effective Date"). The term of this Agreement shall be three (3)
years, unless terminated earlier pursuant to the terms of this Section 14
(Termination and Term). The term shall be extended for additional one year
periods upon the mutual agreement of all parties.
14.2 Upon the occurrence of a material breach or default as to any obligation
hereunder by any party and the failure of the breaching party to promptly pursue
(within thirty (30) days after receiving written notice thereof from the
non-breaching party) a reasonable remedy designed to cure (in the reasonable
judgment of the non-breaching party) such material breach or default, this
Agreement may be terminated by the non-breaching party by giving written notice
of termination to the breaching party, such termination being immediately
effective upon the giving of such notice of termination.
14.3 Upon the filing of a petition in bankruptcy, insolvency or reorganization
against or by any party, or any party becoming subject to a composition for
creditors, whether by law or agreement, or any party going into receivership or
otherwise becoming insolvent (such party hereinafter referred to as the
"insolvent party"), this Agreement may be terminated by the other party by
giving written notice of termination to the insolvent party, such termination
immediately effective upon the giving of such notice of termination.
14.4 Upon the occurrence of a change in control or management or operating
personnel of any party (the "changed party"), then the changed party shall
promptly notify the other parties (the "other party") in writing within ten (10)
calendar days. If, in the reasonable opinion of the other party such change in
control or management or operating personnel of the changed party could have a
material adverse effect on the business, prospects or operations of the changed
party and if the changed party fails to promptly pursue (within 90 days after
receiving written notice thereof from the other party) a remedy designed to cure
(in the sole judgment of the other party) the other party's objections to such
change, this Agreement may be terminated by the other party by giving written
notice of termination to the changed party, such termination being immediately
effective upon the giving of such notice of termination.
12
<PAGE> 13
14.5 In the event of a termination pursuant to any of subsections 14.2, 14.3 or
14.4 above or upon expiration of this Agreement pursuant to subsection 14.1
above, no party shall have any obligation to, or to any employee of the other
parties, for compensation or for damages of any kind, whether on account of the
loss by the other parties or such employee of present or prospective sales,
investments, compensation or goodwill. Each party, for itself and on behalf of
each of its employees, hereby waives any rights which may be granted to it or
them under the laws and regulations of the Territory or otherwise which are not
granted to it or them by this Agreement. Each party hereby indemnifies and holds
the other parties harmless from and against any and all claims, costs, damages
and liabilities whatsoever asserted by any employee, agent or representative of
such party under any applicable termination, labor, social security or other
similar laws or regulations.
14.6 Termination of this Agreement shall not affect the obligation of Toyobo to
pay Glyko all amounts owing or to become owing as a result of Products tendered
or delivered to Toyobo on or before the date of such termination, as well as
interest thereon to the extent any such amounts are paid after the date they
became or will become due pursuant to this Agreement.
14.7 Notwithstanding anything else in this Agreement to the contrary, the
parties agree that Sections 3.8, 7, 10, 12, 13, 15, 23 and 29 shall survive the
termination or expiration of this Agreement, as the case may be, to the extent
required thereby for the full observation and performance by any or all of the
parties hereto.
15. REPURCHASE OF INVENTORY
15.1 Upon either termination or expiration of this Agreement, as the case may
be, Glyko shall have the option to repurchase Toyobo's and MC Medical's
inventory of Products. Within thirty (30) days after such termination or
expiration, Glyko shall elect in writing to either: (i) permit Toyobo and MC
Medical each to sell off its remaining inventory of Products; provided, however,
that Toyobo and MC Medical each shall comply with all terms and conditions of
this Agreement restricting such activities in effect immediately prior to
termination or expiration; or (ii) repurchase Toyobo's inventory of Products
which are salable and in the original packages and unaltered from their original
form and design, subject to Glyko's inspection, test, and acceptance.
15.2 Any such repurchase of Toyobo's and MC Medical's inventory of Products
shall be at the Toyobo's purchased price. Repurchased inventory shall be shipped
by Toyobo freight prepaid, according to Glyko's instructions. Glyko shall pay
Toyobo and MC Medical for such repurchased Products plus freight and insurance
within thirty (30) days after Glyko receives those Products at its facility. For
the purposes of this provision, "inventory" shall not include Products required
by Toyobo and MC Medical for the fulfillment of orders previously accepted.
16. PUBLICITY
Toyobo and MC Medical each agrees that any publicity or advertising
which shall be released by them in which Glyko is identified in connection with
the Products shall be in accordance with the terms of this Agreement and with
any information or data which Glyko has furnished in connection with this
Agreement. Copies of all such publicity and advertising shall be forwarded
promptly to Glyko.
13
<PAGE> 14
17. MODIFICATION
No modification or change may be made in this Agreement except by
written instrument duly signed by a duly authorized representative of each
party.
18. ASSIGNMENT
This Agreement and the rights and obligations hereunder may not be
assigned, delegated or transferred by any party without the prior written
consent of the other parties.
14
<PAGE> 15
19. NOTICE
All notices given under this Agreement shall be in writing and shall be
addressed to the parties at their respective addresses set forth below:
If to Toyobo:
Biochemical Operations Department
Toyobo Co., Ltd.
2-8 Dojimahama 2-chome
Kita-ku
Osaka 530 JAPAN
Attention: General Manager
Facsimile Number: 81-6-348-3833
If to MC Medical:
MC Medical, Inc.
22 Daikyo-cho, Shinjuku-ku
Tokyo, 160 JAPAN
Attention: Chief Executive Officer
Facsimile: 81-3-3357-6255
If to Glyko:
Glyko, Inc.
81 Digital Drive
Novato, CA 94949
UNITED STATES
Attention: Chief Executive Officer
Facsimile Number: 415-382-7889
15
<PAGE> 16
Any party may change its address or its facsimile number for purposes
of this Agreement by giving the other parties written notice of its new address
or facsimile number. Any such notice if given or made by registered or recorded
delivery international air mail letter shall be deemed to have been received on
the earlier of the date actually received and the date fifteen (15) calendar
days after the same was posted (and in proving such it shall be sufficient to
prove that the envelope containing the same was properly addressed and posted as
aforesaid) and if given or made by facsimile transmission shall be deemed to
have been received at the time of dispatch, unless such date of deemed receipt
is not a Business Day, in which case the date of deemed receipt shall be the
next such succeeding Business Day.
20. WAIVER
None of the conditions or provisions of this Agreement shall be held to
have been waived by any act or knowledge on the part of any party, except by an
instrument in writing signed by a duly authorized officer or representative of
such party. Further, the waiver by any party of any right hereunder or the
failure to enforce at any time any of the provisions of this Agreement, or any
rights with respect thereto, shall not be deemed to be a waiver of any other
rights hereunder or any breach or failure of performance of the other parties.
21. VALIDITY
Glyko warrants that this Agreement is lawful and may be performed in
accordance with its terms under all laws, rules and regulations in force in the
United States at the time of execution of this Agreement. Toyobo and MC Medical
each warrants that this Agreement is lawful and may be performed in accordance
with its terms under all laws, rules and regulations in force in Japan at the
time of execution of this Agreement. Each party covenants and warrants to the
other parties that it will advise the other parties of any changes in the laws
of the country to which it is making a warranty in this Section of which the
party making such warranty becomes aware if such changes might or will impair
the validity or lawful performance of all or any part of this Agreement.
22. CONSTRUCTION OF AGREEMENT AND RESOLUTION OF DISPUTES
22.1 This Agreement, which is in English, shall be interpreted in accordance
with the commonly understood meaning of the words and phrases hereof in the
United States of America, and it and performance of the parties hereto shall be
construed and governed according to the laws of the State of California
applicable to contracts made and to be fully performed therein, excluding the
United Nations Convention on Contracts for the International Sale of Goods.
22.2 Any dispute, controversy or claim arising out of or relating to this
Agreement or to a breach hereof, including its interpretation, performance or
termination, shall be settled by negotiation between the parties. In the event
that no settlement can be reached then the issue will be finally resolved by
arbitration. The arbitration shall be conducted by one arbitrator selected by
Glyko, Toyobo and MC Medical or, if they cannot agree on an arbitrator, by the
President of American Arbitration Association.
16
<PAGE> 17
The arbitration shall be conducted in English and in accordance with
the rules of the American Arbitration Association, which shall administer the
arbitration and act as appointing authority. The arbitration, including the
rendering of the award, shall take place in San Francisco, CA, United States,
and shall be the exclusive forum for resolving such dispute, controversy or
claim. For the purposes of this arbitration, the provisions of this Agreement
and all rights and obligations thereunder shall be governed and construed in
accordance with the laws of the State of California. The decision of the
arbitrators shall be binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorneys' fees to the
prevailing party) shall be paid as the arbitrators determine. The decision of
the arbitrators shall be executory, and judgment thereon may be entered by any
court of competent jurisdiction.
22.3 Notwithstanding anything contained in this Section 22 to the contrary,
each party shall have the right to institute judicial proceedings against any
other party or anyone acting by, through or under such other party, in order to
enforce the instituting party's rights hereunder through reformation of
contract, specific performance, injunction or similar equitable relief.
23. CONFIDENTIALITY MAINTAINED
23.1 Each party agrees that the other parties have a proprietary interest in
any information provided by it, whether in connection with this Agreement or
otherwise, whether in written or oral form, which is (i) a trade secret,
confidential or proprietary information, (ii) not publicly known, and (iii)
annotated by a legend, stamp or other written identification as confidential or
proprietary information (hereinafter referred to as "Proprietary Information").
Each party shall disclose the Proprietary Information provided by the other
parties only to those of its agents and employees to whom it is necessary in
order properly to carry out their duties as limited by the terms and conditions
hereof. Both during and after the term of this Agreement, all disclosures by the
party receiving Proprietary Information to its agents and employees shall be
held in strict confidence by such agents and employees. During and after the
term of this Agreement, such receiving party, its agents and employees shall not
use the Proprietary Information for any purpose other than in connection with
discharging its duties in the Territory pursuant to this Agreement. The
receiving party shall, at its expense, return to the disclosing party the
Proprietary Information provided by such disclosing party as soon as practicable
after the termination or expiration of this Agreement. During the term of this
Agreement and thereafter, all such Proprietary Information shall remain the
exclusive property of the party which provided it. This Section 23 shall also
apply to any consultants or subcontractors that the receiving party may engage
in connection with its obligations under this Agreement. The obligations of
secrecy and use-restriction set forth in this Section 23.1 shall survive the
termination or expiration of this Agreement for a period of XXXXXXXXXXXXXX after
such termination or expiration.
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<PAGE> 18
23.2 Notwithstanding anything contained in this Agreement to the contrary, each
of the parties shall not be liable for a disclosure of the Proprietary
Information of the other party if the information so disclosed: (i) was in the
public domain at the time of disclosure without breach of this Agreement; or
(ii) was known to or contained in the records of receiving party from a source
other than providing party at the time of disclosure by providing party to
receiving party and can be so demonstrated; or (iii) was independently developed
and is so demonstrated promptly upon receipt of the documentation and technology
by receiving party; or (iv) becomes known to the receiving party from a source
other than providing party without breach of this Agreement by receiving party
and can be so demonstrated; or (v) must be disclosed pursuant to a contract or
subcontract with a governmental agency in order to obtain/retain a procurement
contract; or (vi) was disclosed pursuant to court order or as otherwise
compelled by law.
24. ENTIRE AGREEMENT
This Agreement supersedes and cancels any previous agreements or
understandings, whether oral, written or implied, heretofore in effect and sets
forth the entire agreement among Glyko, Toyobo and MC Medical with respect to
the subject matter hereof.
25. NO RIGHTS BY IMPLICATION
No rights or licenses with respect to the Products or the Trademarks
are granted or deemed granted hereunder or in connection herewith, other than
those rights expressly granted in this Agreement.
26. RESPONSIBILITY FOR TAXES
Taxes, whether in Japan or any other country, now or hereafter imposed
with respect to the transactions contemplated hereunder (with the exception of
income taxes or other taxes imposed upon Glyko and measured by the gross or net
income of Glyko) shall be the responsibility of Toyobo and MC Medical , and if
paid or required to be paid by Glyko, the amount thereof shall be added to and
become a part of the amounts payable by Toyobo and MC Medical hereunder.
27. MODIFICATION OF PRODUCT
Toyobo and MC Medical may not customize, modify or have customized or
modified any Product unless it obtains the prior written consent of Glyko, which
consent may be withheld in the sole discretion of Glyko. Any unauthorized
customizing or modification of any Product by Toyobo or MC Medical or any third
party shall relieve Glyko from any obligation it would otherwise have had with
respect to such Product under the warranties described in Exhibit C hereto.
18
<PAGE> 19
28. FORCE MAJEURE
28.1 Neither Glyko nor Toyobo nor MC Medical shall be liable in damages, or
shall be subject to termination of this Agreement by the other party, for any
delay or default in performing any obligation hereunder if that delay or default
is due to any cause beyond the reasonable control and without fault or
negligence of that party; provided that, in order to excuse its delay or default
hereunder, a party shall notify the other of the occurrence or the cause,
specifying the nature and particulars thereof and the expected duration thereof;
and provided, further, that within fifteen (15) calendar days after the
termination of such occurrence or cause, such party shall give notice to the
other party specifying the date of termination thereof. All obligations of all
parties shall return to being in full force and effect upon the termination of
such occurrence or cause (including without limitation any payments which became
due and payable hereunder prior to the termination of such occurrence or cause).
28.2 For the purposes of this Section 28, a "cause beyond the reasonable
control" of a party shall include, without limiting the generality of the
phrase, any act of God, act of any government or other authority or statutory
undertaking, industrial dispute, fire, explosion, accident, power failure,
flood, riot or war (declared or undeclared).
29. COMPLIANCE WITH LAWS
Each of Toyobo, MC Medical and Glyko covenants that all of its
activities under or pursuant to this Agreement shall comply with all applicable
laws, rules and regulations. In particular, but without limitation, Toyobo and
MC Medical each shall be responsible for obtaining all licenses, permits and
approvals which are necessary or advisable for sales of Products in the
Territory and for the performance of its duties hereunder.
30. SEVERABILITY
If any provision of this Agreement is declared invalid or unenforceable
by a court having competent jurisdiction, it is mutually agreed that this
Agreement shall endure except for the part declared invalid or unenforceable by
order of such court. The parties shall consult and use their best efforts to
agree upon a valid and enforceable provision which shall be a reasonable
substitute for such invalid or unenforceable provision in light of the intent of
this Agreement.
31. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE> 20
32. DEFINITION OF AFFILIATES
For the purposes of this Agreement, "affiliates" shall mean all
companies, natural persons, partnerships and other business entities controlled
by, under common control with or controlling either party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement.
Toyobo Co., Ltd., as Toyobo Glyko, Inc., as Glyko
By: ___________________________ By: _________________________
Name: ________________________ Name: ________________________
Title: _________________________ Title: _________________________
Date: _________________________ Date: ________________________
MC Medical, Inc., as MC Medical
By: ___________________________
Name: ________________________
Title: _________________________
Date: _________________________
20
<PAGE> 21
EXHIBIT A - PRODUCT DESCRIPTION AND PRICE LIST
PRODUCT DESCRIPTION AND PRICE LIST
(VERSION DATED 18AUGUST95 - PRICES EFFECTIVE 01OCT95)
<TABLE>
<CAPTION>
FACE Carbohydrate Analysis Kits
(Includes all reagents, gels and buffer packs for the stated number of analyses)
DESCRIPTION PRODUCT NUMBER SIZE PRICE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FACE N-Linked Oligosaccharide Profiling Starter Kit * 90020 40 Reactions $795
FACE N-Linked Oligosaccharide Profiling Kit 90010 40 Reactions $545
90000 80 Reactions $995
FACE Monosaccharide Composition Starter Kit * 90120 40 Reactions $795
FACE Monosaccharide Composition Kit 90110 40 Reactions $545
90100 80 Reactions $845
FACE O-Linked Oligosaccharide Profiling Starter Kit * 90220 15 Reactions $795
FACE O-Linked Oligosaccharide Profiling Kit 90210 15 Reactions $545
90200 30 Reactions $995
FACE N-Linked Oligosaccharide Sequencing Kit 90300 10 Assays $950
FACE Glycosphingolipid Oligosaccharide Profiling Starter Kit * 90520 20 Reactions $795
FACE Glycosphingolipid Oligosaccharide Profiling Kit 90510 20 Reactions $545
90500 40 Reactions $995
FACE Glycosaminoglycan Identification Starter Kit * 90620 30 Reactions $795
FACE Glycosaminoglycan Identification Kit 90610 30 Reactions $545
90600 60 Reactions $995
</TABLE>
* Each Starter Kit includes a Glyko Electrophoresis Gel Box #40026 at a 50%
discount. One Starter Kit per customer, please.
21
<PAGE> 22
<TABLE>
<CAPTION>
Individual Reagent Packs, Standards and Controls
DESCRIPTION PRODUCT NUMBER SIZE PRICE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FACE ANTS Labeling Reagent Pack 50004 40 Reactions $250
for labeling N- and O-Linked Oligosaccharides
FACE N-Linked Oligosaccharide Release Reagent Pack 50002 40 Reactions $300
FACE N-Linked Oligosaccharide Electrophoresis Standard and Control 50006 25 Assays $250
FACE O-Linked Oligosaccharide Release Reagent Pack 50202 30 Reactions $300
FACE O-Linked Oligosaccharide Electrophoresis Standard and Control 50206 25 Assays $200
FACE Monosaccharide Hydrolysis Reagent Pack 50102 40 Reactions $ 75
FACE Monosaccharide Labeling Reagent Pack 50104 40 Reactions $250
FACE Monosaccharide Electrophoresis Standard and Control 50106 25 Assays $250
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION PRODUCT NUMBER SIZE PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FACE N-Linked Oligosaccharide Profiling Gels 60020 10 gels $190
60010 5 gels $100
FACE N-Linked Oligosaccharide Preparative Gels, 1 mm thick 60050 1 gel $ 20
for isolating N-Linked Oligosaccharides for sequencing
FACE Monosaccharide Composition Gels 60120 10 gels $190
60110 5 gels $100
FACE O-Linked Oligosaccharide Profiling Gels 60220 10 gels $190
60210 5 gels $100
FACE Oligosaccharide Gel Running Buffer Packs 70020 10 packs $ 45
70010 5 packs $ 25
</TABLE>
22
<PAGE> 23
HARDWARE, SOFTWARE & ACCESSORIES
<TABLE>
<CAPTION>
DESCRIPTION PRODUCT NUMBER QUANTITY PRICE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SE1000 FACE(R) Workstation 45000 1 System $19,950
Includes the following:
1) SE1000 FACE Imager with Interface Card, cable and FACE Analytic
Software
2) Dell 486 computer loaded with DOS 6.2, Windows 3.1, 15"
Enhanced Super VGA monitor, keyboard, Microsoft(R) mouse and
internal 230 Mb optical drive with formatted optical disk
3) HP-5P LaserJet Printer with cable
4) One FACE Starter Kit of your choice including Glyko Electrophoresis Gel Box
SE1000 FACE Imager 45100 1 Each $15,700
Includes the following:
1) SE1000 FACE Imager with Interface Card, cable and FACE Analytic Software
2) One FACE Starter Kit of your choice including Glyko Electrophoresis Gel Box
FACE Analytic Software 44100 1 Copy $ 4,500
Glyko Electrophoresis Gel Box 40026 1 Each $ 495
(With quick release fittings for re-circulating chiller)
Electrophoresis Power Supply 40102 1 Each Inquire
Re-circulating Chiller 40202 1 Each Inquire
</TABLE>
GLYCOSIDASES FOR CARBOHYDRATE ANALYSIS
<TABLE>
<CAPTION>
DESCRIPTION PRODUCT NUMBER SIZE PRICE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PNGase F, recombinant, releases Asn-linked oligosaccharides 80000 20 Reactions $135
80008 100 Reactions $500
Endo H, recombinant 80100 20 Reactions $135
releases Asn-linked high mannose and hybrid type oligosaccharides 80108 100 Reactions $500
O-Glycosidase DS, recombinant, releases Ser/Thr linked Gal-GalNAc 80090 20 Reactions $135
Enzymatic Deglycosylation Kit 80110 20 Reactions $350
includes PNGase F, O-Glycosidase DS, NANase II and Fetuin Control
HEPase I, recombinant, cleaves heparin and heparan sulfate 80130 200 Reactions $135
Ceramide Glycanase, releases oligosaccharides from glycosphingolipids 50410 20 Reactions $135
</TABLE>
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<PAGE> 24
GLYCOSIDASES FOR CARBOHYDRATE ANALYSIS
<TABLE>
<CAPTION>
DESCRIPTION PRODUCT NUMBER SIZE PRICE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Exoglycosidases
NANase I, recombinant, releases a2-3 neuraminic acid 80020 20 Reactions $135
NANase II, recombinant, releases a2-3,6 neuraminic acid 80030 20 Reactions $135
80038 100 Reactions $500
NANase III, recombinant, releases a2-3,6,8,9 neuraminic acid 80040 20 Reactions $135
Neuraminic Acid Linkage Analysis Kit, includes NANase I, II AND III 80010 60 Reactions $350
GALase I, releases b1-3,4,6 galactose 50352 20 Reactions $135
GALase II, recombinant, releases b1-3,6 galactose 80120 20 Reactions $135
HEXase I, recombinant, releases b1-2,3,4,6 N-acetylglucosamine 80050 20 Reactions $135
HEXase II, recombinant 80150 20 Reactions $135
releases both b-N-acetylglucosamine and b-N-acetylgalactosamine
Hexosamine Differentiation Kit, includes HEXase I and HEXase II 80160 20 Reactions $230
HEXase III, releases both b-N-acetylglucosamine and b-N-acetylgalactosamine 50354 20 Reactions $350
MANase I, recombinant, releases a1-2,3,6 mannose 80060 20 Reactions $135
MANase II, releases a1-2,3,6 mannose 50356 10 Reactions $135
FUCase I, recombinant, releases a1-6 fucose 80080 20 Reactions $135
FUCase II, releases a1-2 fucose 80170 20 Reactions $135
FUCase III, releases a1-3,4 fucose 80180 20 Reactions $135
Fucose Differentiation Kit, includes FUCase I, II, III 80190 20 Reactions $350
b-Xylosidase, recombinant, releases b1-4 xylose 80140 50 Reactions $195
</TABLE>
24
<PAGE> 25
CARBOHYDRATE ANALYTIC SERVICES
<TABLE>
<CAPTION>
SERVICE/CATALOG NUMBER PRICE/SAMPLE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Analysis of Purified Glycoconjugates
97010 Profiling of N-linked Oligosaccharides * (1) $375
97020 Profiling of O-linked Oligosaccharides * (1) $375
97090 Profiling of Glycosphingolipid Oligosaccharides * (1) $375
97030 Monosaccharide Composition Analysis * (2) $375
Isolation and Purification of an Oligosaccharide
97050 Isolation of an Oligosaccharide Band from a Purified Glycoprotein or Glycosphingolipid (3) $300
Release, labeling, electrophoresis and isolation of separated oligosaccharides
Analysis of Isolated Oligosaccharides
97060 Enzymatic Sequencing of an Isolated N-linked Oligosaccharide (4) $500
97070 Enzymatic Sequencing of an Isolated O-Linked Oligosaccharide (4) $500
97100 Enzymatic Sequencing of an Isolated Glycosphingolipid Oligosaccharide (4) $500
97080 Sialic Acid Linkage Determination of an Isolated Oligosaccharide $300
Recombinant enzyme release using (a2-3), (a2-6) or (a2-8) linkage specific enzymes,
electrophoresis and determination of molar ratios
97040 Monosaccharide Composition of an Isolated Oligosaccharide $375*
Hydrolysis, labeling, electrophoresis and quantitation of fialic acid,
neutral, and Mine monosaccharides
Data includes quantitation of N-glycolylneuraminic acid,
N-acetylneuraminic acit, N-acetylgalactosamine, N-acetylglucosamine,
mannose, galactose, fucose, and glucose
Other Services
97000 Custom Analytic Services - Please call us with your specific request Variable
</TABLE>
* Price includes analysis of a customer supplied blank sample
(1) Release, labeling, electrophoresis and quantitation of oligosaccharides
Data includes minimum number of oligosaccharides, relative size and
relative molar ratios
(2) Hydrolysis, labeling, electrophoresis and quantitation of sialic acid,
neutral, and amine monosaccharides
Data includes quantitation of N-acetylneuraminic acid,
N-acetylgalactosamine, N-acetylglucosamine, mannose, galactose, fucose,
and glucose
(3) $50 for each additional Oligosaccharide isolated at the same time from
the same Glycoprotein or Glycosphingolipid
(4) Sequencing performed according to Glyko Sequencing Kit protocols
Enzymatic cleavage, electrophoresis, and determination of
Monosaccharide sequence
$250 for each additional Oligosaccharide sequenced at the same time
Prices are subject to change without notice. Terms are Net 30, FOB Novato,
California, USA
25
<PAGE> 26
EXHIBIT B - END-USER SOFTWARE SUBLICENSE AGREEMENT
READ CAREFULLY
FACE(R)
Glyko, Inc. Single User License Agreement
This Agreement is a LEGAL CONTRACT between you ("end user") and Glyko, Inc.
("Glyko") By opening the sealed disk package you have indicated your acceptance
of the terms of this agreement. If you do not agree to the terms of this
agreement, promptly return the unopened package to Glyko, Inc., 81 Digital Dr.,
Novato CA, 94949 for a full refund.
1.)LICENSE GRANT, Glyko grants you the right to use one copy of the enclosed
FACE(R) software program ("software") on a single computer. Purchase of a
separate License is required for use on an additional computer or distribution
on a Network for use by one or more networked computers.
2.)COPYRIGHT, This software is protected by United States copyright laws and
international treaty provisions. As such you may make one copy of the software
for backup purposes only.
3.)OTHER RESTRICTIONS, You may not rent, lease or network the software. You may
not reverse engineer, decompile or disassemble the software. You may not create
derivative works based on the copyrighted design of the software.
4.)LIMITED WARRANTY, Glyko warrants that the enclosed software will perform as
documented for a period of 90 days from the date of receipt.
5.)NO OTHER WARRANTIES, Glyko disclaims all other warranties, either expressed
or implied.
6.)LIMIT OF LIABILITY, In no event shall Glyko be liable for damages whatsoever.
This includes without limitation, damages for loss of business profits, business
interruption, loss of business information, loss of sample materials or any
other consequential or pecuniary loss which may arise from the use or inability
to use the software.
26
<PAGE> 27
EXHIBIT C - LIMITED WARRANTY
The following two (2) pages are taken from the FACE(R) Imager User's Manual
Version Dated 16 March 1994. The Warranty Language appears on the
second of the two (2) pages following this page.
The remainder of this page is intentionally left blank.
27
<PAGE> 28
FACE(R) User's Guide
Imager and Software Operations
Version 2.3
Copyright 1992, 1993, 1994 All rights reserved, GLYKO INC.
81 Digital Dr, Novato CA 94949
PHONE 1-800-33-GLYKO (1-800-334-5956) OR 1-415-382-6653
8:30 AM - 5:30 PM PT
FAX 1-415-382-7889
28
<PAGE> 29
FACE WARRANTY
FACE WORKSTATION AND COMPONENTS
FACE IMAGER
Glyko warrants the FACE imager to be free from defects in material and
workmanship when used under normal laboratory conditions for a period
of one year from the date of delivery. This warranty covers parts and
labor for the first 90 days and then parts only for the remainder of
the warranty period.
DELL COMPUTER
One year on site parts and service provided by Dell Computers.
NOT COVERED
This warranty does not cover systems or components which have been
abused or have undergone unauthorized repair. This warranty does not
cover the cost of shipping items to Glyko.
NO OTHER WARRANTIES
Glyko disclaims all other warranties, either expressed or implied.
LIMIT OF LIABILITY
In no event shall Glyko be liable for damages whatsoever. This includes
without limitation, damages for loss of business profits, business
interruption, loss of business information, loss of sample materials or
any other consequential or pecuniary loss which may arise from the use
or inability to use the FACE system and components.
REPAIR TURN AROUND
Glyko will attempt to keep turn around times to 2 weeks and under on
Imager repairs.
29
