-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KgtZ3sMrp/gLnaDS4+ALL94uV76Qz+/oGnbG0ZEI7FopJmvRp5GMjqGvaAy/f6y6 HKBLeQ49C3rxsgq+m2vSWw== 0000891618-01-502199.txt : 20020410 0000891618-01-502199.hdr.sgml : 20020410 ACCESSION NUMBER: 0000891618-01-502199 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIPER TECHNOLOGIES CORP CENTRAL INDEX KEY: 0001014672 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 330675808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28229 FILM NUMBER: 1785890 BUSINESS ADDRESS: STREET 1: 605 FAIRCHILD DR STREET 2: STE 405 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 6506230700 MAIL ADDRESS: STREET 1: 605 FAIRCHILD DRIVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 10-Q 1 f76917e10-q.txt FORM 10-Q QUARTER ENDED SEPTEMBER 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED SEPTEMBER 30, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _________________. Commission file # 000-28229 CALIPER TECHNOLOGIES CORP. (Exact name of registrant as specified in its charter) Delaware 33-0675808 (State of Incorporation) (I.R.S. Employer Identification Number) 605 FAIRCHILD DRIVE MOUNTAIN VIEW, CA 94043-2234 (Address and zip code of principal executive offices) Registrant's telephone number, including area code: (650) 623-0700 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 __ COMMON SHARES OUTSTANDING ON NOVEMBER 2, 2001: 24,131,170 CALIPER TECHNOLOGIES CORP. TABLE OF CONTENTS
Page ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed Balance Sheets as of September 30, 2001 and December 31, 2000.............................................. 2 Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2001 and 2000.................................. 3 Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000.................................. 4 Notes to Unaudited Condensed Financial Statements.................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................. 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk............. 20 PART II OTHER INFORMATION Item 1. Legal Proceedings...................................................... 21 Item 2. Changes in Securities and Use of Proceeds.............................. 21 Item 3. Defaults upon Senior Securities........................................ 22 Item 4. Submission of Matters to a Vote of Security Holders.................... 22 Item 5. Other Information...................................................... 22 Item 6. Exhibits and Reports on Form 8-K....................................... 22 SIGNATURES............................................................................... 23
1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CALIPER TECHNOLOGIES CORP. CONDENSED BALANCE SHEETS (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 2001 2000 ------------------------------ ASSETS (unaudited) Current assets: Cash and cash equivalents ............................. $ 5,156 $ 36,294 Marketable securities ................................. 85,760 106,303 Accounts receivable ................................... 3,826 2,991 Inventories ........................................... 4,677 2,206 Other receivable ...................................... 26,475 1,033 Prepaid expenses and other current assets ............. 2,524 1,237 --------- --------- Total current assets .................................... 128,418 150,064 Marketable securities ................................... 79,522 49,102 Investment in common stock .............................. 5.070 -- Security deposits ....................................... 3,200 3,000 Property and equipment, net ............................. 12,727 9,101 Notes receivable from officers .......................... 475 615 Other assets, net ....................................... 547 632 --------- --------- Total assets ............................................ $ 229,959 $ 212,514 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ...................................... $ 2,974 $ 2,960 Accrued compensation .................................. 2,949 1,946 Other accrued liabilities ............................. 358 1,351 Deferred revenue ...................................... 3,071 3,763 Current portion of equipment financing ................ 1,806 1,671 --------- --------- Total current liabilities ............................... 11,158 11,691 Noncurrent portion of equipment financing ............... 3,665 3,534 Deferred revenue and income credit ...................... 166 194 Other noncurrent liabilities ............................ 1,191 638 Commitments and contingencies Stockholders' equity: Common stock .......................................... 24 23 Additional paid-in capital ............................ 250,448 249,004 Deferred stock compensation ........................... (2,745) (4,772) Accumulated deficit ................................... (36,585) (48,426) Accumulated other comprehensive income ................ 2,637 628 --------- --------- Total stockholders' equity .............................. 213,779 196,457 --------- --------- Total liabilities and stockholders' equity .............. $ 229,959 $ 212,514 ========= =========
See accompanying notes. 2 CALIPER TECHNOLOGIES CORP. CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 2001 2000 2001 2000 --------------- -------------- -------------- -------------- Revenue: Product revenue .......................................... $ 1,581 $ 1,209 $ 4,769 $ 1,998 Product revenue-related party (Note 4) ................... 2,017 -- 2,017 -- License fees and contract revenue ........................ 3,043 4,298 14,935 11,578 -------- -------- -------- -------- Total revenue .............................................. 6,641 5,507 21,721 13,576 Costs and expenses: Cost of product revenue .................................. 893 839 2,857 1,672 Cost of product revenue-related party (Note 4) ........... 1,382 -- 1,382 -- Research and development ................................. 9,985 8,987 28,358 22,650 Selling, general and administrative ...................... 4,327 2,464 10,692 7,300 Amortization of deferred stock compensation (Note 1) .... 587 1,020 2,027 3,663 -------- -------- -------- -------- Total costs and expenses ................................... 17,174 13,310 45,316 35,285 -------- -------- -------- -------- Operating loss ............................................. (10,533) (7,803) (23,595) (21,709) Interest income, net ....................................... 2,165 1,870 7,936 4,528 Gain on settlement of litigation ........................... -- 12,000 27,500 12,000 -------- -------- -------- -------- Net income(loss) before accounting change .................. (8,368) 6,067 11,841 (5,181) Cumulative effect of a change in accounting principle ...... -- -- -- (2,294) -------- -------- -------- -------- Net income(loss) ........................................... $ (8,368) $ 6,067 $ 11,841 $ (7,475) ======== ======== ======== ======== Net income(loss) per share, basic: Net income(loss) before accounting change .................. $ (0.35) $ 0.28 $ 0.49 $ (0.24) Cumulative effect of a change in accounting principle ...... -- -- -- (0.11) -------- -------- -------- -------- Net income(loss) per share ................................. $ (0.35) $ 0.28 $ 0.49 $ (0.35) ======== ======== ======== ======== Shares used in computing net income(loss) per share, basic . 24,059 21,971 23,947 21,278 Net income(loss) per share, diluted: Net income(loss) before accounting change .................. $ (0.35) $ 0.25 $ 0.46 $ (0.24) Cumulative effect of a change in accounting principle ...... -- -- -- (0.11) -------- -------- -------- -------- Net income(loss) ........................................... $ (0.35) $ 0.25 $ 0.46 $ (0.35) ======== ======== ======== ======== Shares used in computing net income(loss) per share, diluted 24,059 24,281 25,641 21,278 (1) Amortization of deferred stock compensation relates to the following: Research and development ................................... $ 383 $ 663 $ 885 $ 1,599 General and administrative ................................. 204 357 1,142 2,064 -------- -------- -------- -------- Total ...................................................... $ 587 $ 1,020 $ 2,027 $ 3,663 ======== ======== ======== ========
See accompanying notes. 3 CALIPER TECHNOLOGIES CORP. CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, --------------------------- 2001 2000 --------- --------- OPERATING ACTIVITIES Net income(loss) .............................................. $ 11,841 $ (7,475) Adjustments to reconcile net income (loss) to net cash used in operating activities: Gain on settlement of litigation and non-cash license revenue (32,500) -- Cumulative effect of a change in accounting principle ....... -- 2,294 Depreciation and amortization ............................... 2,626 1,449 Amortization of deferred stock compensation ................. 2,027 3,663 Stock options issued to non-employees ....................... (79) 483 Changes in operating assets and liabilities: Accounts receivable ....................................... 256 (573) Inventories ............................................... (2,471) (1,938) Other receivable .......................................... (58) (12,000) Prepaid expenses and other current assets ................. (320) (339) Notes receivable from officers ............................ 140 10 Other noncurrent asset .................................... (211) (182) Accounts payable and other accrued liabilities ............ (979) 1,762 Accrued compensation ...................................... 1,003 639 Deferred revenue .......................................... (720) (852) Other noncurrent liabilities .............................. 553 271 --------- --------- Net cash used in operating activities ......................... (18,892) (12,788) --------- --------- INVESTING ACTIVITIES Purchases of available-for-sale securities .................... (167,755) (136,731) Proceeds from sales of available-for-sale securities .......... 87,326 12,012 Proceeds from maturities of available-for-sale securities ..... 72,561 38,251 Purchase of property and equipment ............................ (6,168) (2,433) --------- --------- Net cash used in investing activities ......................... (14,036) (88,901) --------- --------- FINANCING ACTIVITIES Proceeds from equipment financing ............................. 1,686 1,378 Payments of obligations under equipment financing ............. (1,420) (1,224) Proceeds from issuance of common stock ........................ 1,524 105,486 --------- --------- Net cash provided by financing activities ..................... 1,790 105,640 --------- --------- Net decrease in cash and cash equivalents ..................... (31,138) 3,951 Cash and cash equivalents at beginning of period .............. 36,294 44,772 --------- --------- Cash and cash equivalents at end of period .................... $ 5,156 $ 48,723 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid ................................................. $ 486 $ 464 ========= ========= SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NONCASH INVESTING ACTIVITIES Other receivable .............................................. 26,475 -- Investment in common stock .................................... 5,058 -- Other assets .................................................. 967 --
See accompanying notes. 4 CALIPER TECHNOLOGIES CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2000 filed by Caliper Technologies Corp. REVENUE RECOGNITION Revenue is earned from Caliper's collaboration agreement, Technology Access Program agreements, LabChip(R) High Throughput Screening System, Automated Microfluidics Systems 90, Applications Developer Program, licensing and royalty agreements and government grants. COLLABORATION AGREEMENT Revenue from development activities under Caliper's collaboration agreement is recorded in the period in which the costs are incurred. Direct costs associated with this contract are reported as research and development expense. Revenue related to the reimbursement of costs for the supply of chips and reagents to Caliper's collaboration partner is recognized upon shipment. Caliper's share of gross margin on components of the LabChip(R) system sold by the collaboration partner is recognized as revenue upon shipment by the collaboration partner to the end user. TECHNOLOGY ACCESS PROGRAM AGREEMENTS Caliper has entered into a number of multi-year Technology Access Program agreements that include: (1) access to existing technology; (2) a multi-year subscription for technology developed during the subscription period; (3) development and support services; and (4) access to prototype LabChip(R) systems developed during the subscription period. Caliper allocates the total arrangement fees to each element based on fair value. Fair value is based on renewal rates for subscriptions, prices established by Caliper's management having the relevant authority for development and support services and the price at which a program participant has the ability to purchase unspecified quantities of a specific prototype product. Prior to January 1, 2000, Caliper recognized non-refundable license fees under its Technology Access Programs as revenue upon transfer of the license to third parties and when no further performance obligations existed. Effective January 1, 2000, Caliper changed its method of accounting for non-refundable license fees to recognize such fees ratably over the term of the committed related Technology Access Program agreement. Caliper believes the change in accounting principle is preferable based on guidance provided in SEC Staff Accounting Bulletin No. 101 -- Revenue Recognition in Financial Statements. Caliper further believes that the change is preferable as it is possible that Technology Access Program participants would not pay the non-refundable license fees without Caliper's continuing involvement in the subscription period, in providing support services, and in making prototype products available for purchase during the subscription period. The $2.3 million cumulative effect of the change in accounting principle was reported as a charge in the period ended March 31, 2000. The cumulative effect was initially recorded as deferred revenue and is being recognized as revenue over the remaining contractual terms of the Technology Access Program agreements. During the quarter ended March 31, 2000, the impact of the change in accounting was to increase net loss by ($1.8 million), or ($0.09 per share), comprised of the $2.3 million cumulative effect of the change in accounting principle ($0.11 per share), net of $450,000 of the related deferred revenue which was recognized as revenue during the quarter ($0.02 per share). During the three and nine months ended September 30, 2001, Caliper recorded $200,000 ($0.01 per share) and $600,000 ($0.02 per share) of the related deferred revenue as revenue. The remainder 5 of the related deferred revenue will be recognized as revenue approximately as follows: $200,000 in the last quarter of 2001 and $194,000 in 2002. Subscription fees are recognized ratably over the subscription period. When payment of the subscription fee is contingent upon reaching a milestone, revenue is deferred until the milestone is met. Support and development services revenue is recognized in the periods the costs are incurred. Product revenue is recognized upon transfer of title to the customer. LABCHIP(R) HIGH THROUGHPUT SCREENING SYSTEM, AUTOMATED MICROFLUIDICS SYSTEMS 90 AND APPLICATIONS DEVELOPER PROGRAM Product revenue is recognized upon the transfer of title to customers and is recorded net of discounts, rebates and allowances. Service revenue is recognized ratably over the service term. LICENSING AND ROYALTY Revenue from Caliper's up-front license fees is recognized when the earnings process is complete and no further obligations exist. If further obligations exist, the up-front license fee is recognized ratably over the obligation period. Royalties from licenses are based on third-party sales and recorded as earned in accordance with contract terms, when third-party results are reliably measured and collectibility is assured. GOVERNMENT GRANTS Caliper's grant from the National Institute of Standards and Technology provides for the reimbursement of qualified expenses for research and development as defined under the terms of the grant agreement. Revenue under grant agreements is recognized when the related research expenses are incurred. DERIVATIVE AND HEDGING ACTIVITIES ACCOUNTING POLICY FOR DERIVATIVE INSTRUMENTS Effective January 1, 2001, Caliper adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. In connection with the adoption of SFAS No. 133, Caliper recognizes derivative financial instruments in the financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders' equity as a component of comprehensive income (loss) depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it is designated as a fair value hedge or cash flow hedge. For derivative instruments that are designated and qualify as fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings during the period of the change in fair values. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in current earnings during the period of change. Hedge effectiveness is assessed on a quarterly basis. As discussed in Note 5, Caliper has entered into a settlement agreement with Aclara Biosciences. The terms of the agreement provide that if Caliper sells any of the 900,000 shares of Aclara's common stock received in the settlement between 18 and 24 months from the effective date of the settlement agreement, and the then fair value of Aclara's stock is less than $36.11 per share, Aclara will pay Caliper in cash a dollar amount equal to the difference between the aggregate fair value of the Aclara stock at the date the shares are disposed and $32.5 million. If the then fair value of the Aclara stock is greater than $36.11 per share, Caliper will receive no additional consideration from Aclara. Caliper is restricted from selling its shares of Aclara for 18 months following the effective date of the settlement agreement. If Caliper sells its shares of Aclara stock at any time after 24 months from the effective date of the settlement agreement, Aclara will have no obligation to provide any additional consideration to Caliper. As discussed in Note 5, Aclara has executed a fully-funded $32.5 million standby letter of credit in favor of Caliper to secure its performance under this potential obligation. In effect, Aclara has guaranteed the aggregate settlement amount of $32.5 million, so long as Caliper sells its Aclara stock within a specified period of time. 6 Caliper has accounted for this arrangement by recording $4.3 million in Aclara stock at fair market value, with a note face value of $28.2 million including other receivable for the fully funded letter of credit which was reduced by the initial fair value ($2.7 million) of an embedded derivative. The embedded derivative has been designated as a fair value hedge of the Aclara stock. The mark-to-market change in the fair value of the Aclara stock is recorded in earnings in the other income or expense line on the statement of operations and is offset by the gains or losses in the fair value of the derivative reported in the same other income or expense line. The ineffective portion of the embedded derivative is also recorded in the other income or expense line on the statement of operations. STOCK-BASED COMPENSATION Caliper accounts for its stock options and equity awards in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and has elected to follow the "disclosure only" alternative prescribed by Financial Accounting Standards Board's SFAS No. 123, "Accounting for Stock-Based Compensation." Caliper accounts for stock options issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force 96-18. For the three and nine months ended September 30, 2001, compensation expense related to stock options issued to non-employees was ($21,000) and ($79,000), respectively, compared to $92,000 and $483,000 for the three and nine months ended September 30, 2000. NET INCOME (LOSS) PER SHARE Basic earnings per share is calculated based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share would give effect to the dilutive effect of common stock equivalents consisting of stock options and warrants (calculated using the treasury stock method). Potentially dilutive securities have been excluded from the diluted earnings per share computations as they have an antidilutive effect due to Caliper's net loss. A reconciliation of shares used in the calculations is as follows (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2001 2000 2001 2000 ------- ------- ------- ------- Basic: Weighted-average shares of common stock outstanding ..... 24,068 22,021 23,961 21,370 Less: weighted-average shares subject to repurchase ..... (9) (50) (14) (92) ------- ------- ------- ------- Weighted-average shares used in basic net income(loss) per share ............................................... 24,059 21,971 23,947 21,278 ======= ======= ======= ======= Diluted: Weighted average shares of common stock outstanding ..... 24,068 22,021 23,961 21,370 Plus: weighted average shares of common stock equivalents -- 2,310 1,694 -- Less: weighted average shares subject to repurchase ..... (9) (50) (14) (92) ------- ------- ------- ------- Weighted average shares used in diluted net income(loss) per share ............................................... 24,059 24,281 25,641 21,278 ======= ======= ======= =======
7 NOTE 2 - INVENTORIES Inventories consist of the following (in thousands):
September 30, December 31, 2001 2000 ------------- ------------ Raw material ............. $2,878 $2,018 Work in process .......... 1,132 151 Finished goods ........... 667 37 ------ ------ Total .................... $4,677 $2,206 ====== ======
NOTE 3 -- COMPREHENSIVE INCOME (LOSS) The components of comprehensive income(loss) for the three and nine months ended September 30, 2001 and 2000 are as follows (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ---------------------- 2001 2000 2001 2000 ------- ------- ------- ------- Net income(loss) ............ $(8,368) $ 6,067 $11,841 $(7,475) Unrealized gain on securities 1,576 166 2,009 93 ------- ------- ------- ------- Comprehensive income(loss) .. $(6,792) $ 6,233 $13,850 $(7,382) ======= ======= ======= =======
NOTE 4 -- RELATED PARTY In May 2001, Caliper formed Amphora Discovery Corp. ("Amphora") transferring certain intangibles to Amphora. In September 2001, Amphora completed a private placement of securities with third party investors raising $25 million which reduced Caliper's ownership to 28 percent. Caliper's investment in Amphora is accounted for under the equity method of accounting. As Caliper's investment in Amphora has no basis for accounting purposes and, because Caliper does not guarantee debt or have commitments to fund losses, Caliper has not recorded its proportionate share of Amphora's operating losses in its financial statements since the completion of Amphora's financing. In September 2001, Caliper and Amphora entered into a LabChip Solutions Agreement and an Intellectual Property Agreement. The LabChip Solutions Agreement provided for the ongoing supply of Caliper high throughput screening systems and chips to Amphora, and for the provision of related services by Caliper to Amphora. It also contains certain intellectual property licensing provisions pertaining to the parties' independent and collaborative efforts to develop new high throughput screening systems based on Caliper's microfluidic technologies. Under the Intellectual Property Agreement, Caliper has granted Amphora certain exclusive rights to use Caliper's High Throughput Screening products in a chemical genomics database business. In September 2001, Caliper sold $2.3 million of the Caliper 250 High Throughput Screening System products to Amphora recording it as a related party sale on the financial statements. Under the equity accounting method, Caliper recorded $2.0 million in related party product sales and deferred 28% of the gross profit, or $249,000 that reflects Caliper's retained ownership interest in the products sold to Amphora. Caliper will recognize this remaining $249,000 as revenue ratably over the next 36 months as Amphora records depreciation on its Caliper 250 High Throughput Screening Systems. NOTE 5 -- LITIGATION On March 22, 1999, Caliper filed a lawsuit in California Superior Court for the County of Santa Clara against Aclara and others alleging that all the defendants misappropriated certain of Caliper's trade secrets relating to Caliper business plans, patents and intellectual property strategy. On September 14, 2000, Caliper reached a settlement agreement with the defendants other than Aclara. On October 27, 2000, the jury returned a verdict in favor of Caliper and against Aclara on Caliper's claims for misappropriation of 8 trade secrets and conversion of property. The jury awarded Caliper $52.6 million for damages to Caliper and unjust enrichment to Aclara, which the court reduced to $35.6 million. On January 7, 2001, Caliper announced a comprehensive settlement agreement with Aclara on all pending litigation between the two companies. Under the terms of the settlement both companies agreed to dismiss all suits and countersuits in the federal and state court actions and to cross-license selected patents. The settlement provides Caliper with freedom to operate under Aclara's `022 family of patents, which includes the `015 and other patents, for its glass chips and related instruments through a fully paid, royalty-free license. Under the terms of the agreement, Aclara will also pay Caliper $37.5 million over the next three years in a combination of stock, cash, and committed minimum royalties. Caliper has agreed to license to Aclara the "Ramsey" family of patents for use with Aclara's polymer chips and related instruments in exchange for license fees and royalties. The two companies have also agreed to an alternative dispute resolution procedure for handling potential future patent disagreements out of court. On March 22, 2001, in connection with the settlement agreement mentioned above, Caliper received 900,000 shares of Aclara's common stock with a then current fair value of $4.3 million. The common stock is restricted from sale for a period of 18 months from the date of the settlement agreement. As a component of the settlement agreement, Aclara has effectively guaranteed the value of the Aclara common stock to be $32.5 million at the time of Caliper's sale of the stock, provided that such sale occurs in the period from 18 months to 24 months from the effective date of the settlement agreement. Aclara entered into a fully-funded $32.5 million standby letter of credit in favor of Caliper to secure its performance under this potential obligation. Accordingly, Caliper has recognized the entire $32.5 million settlement in the quarter ended March 31, 2001. Caliper has recognized $5.0 million of license fee revenue and $27.5 million of litigation settlement in the income statement pursuant to the terms contained in the settlement agreement. Caliper does not have any further obligations under the agreement. Caliper has accounted for this arrangement by recording $4.3 million in Aclara stock at fair market value, with a note face value of $28.2 million including other receivable for the fully funded letter of credit which was reduced by the initial fair value ($2.7 million) of an embedded derivative. The latter two elements in combination represent the guarantee. The receivable will be accreted to its face value of $28.2 million over the life of the receivable using the level-yield method. The embedded derivative will be accounted for as discussed in Note 1. Commencing on June 7, 2001, Caliper and three of its officers and directors (David V. Milligan, Daniel L. Kisner and James L. Knighton) have been named as defendants in three securities class action lawsuits filed in the United States District Court for the Southern District of New York. The first such suit is captioned Colbert Birnet, L.P v. Caliper Technologies Corp., et al.., No. 01-CV-5072. The other two suits are captioned Kovel v. Caliper Technologies Corp., et al., No. 01-CV-5964 and Leach v. Caliper Technologies Corp., et al., 01-CV-6537.Caliper believes that the cases will be consolidated and that a single consolidated complaint will be filed after the court appoints a lead plaintiff. The Kovel and Leach complaints allege claims against Caliper and certain individual officers or directors of Caliper under Sections 11 and 15 of the Securities Act of 1933. The Birnet and Kovel complaints allege claims against Caliper and certain individual officers and directors of Caliper under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 of the Securities Exchange Act. Each of the complaints also names as a defendant one or more of the underwriters of Caliper's December 1999 initial public offering of common stock. Each of the complaints alleges that one or more of these underwriters charged excessive, undisclosed commissions to investors and entered into improper agreements with investors relating to aftermarket transactions. The complaints seek rescission or rescissionary damages on the Section 11 claims and an unspecified amount of money damages on the Rule 10b-5 claims. Based on information currently available to Caliper, Caliper believes that the claims alleged against Caliper and its officers and directors are without merit. Caliper intends to defend these cases vigorously. NOTE 6 - RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets." The statements eliminate the pooling-of-interests method of accounting for business combinations and require that goodwill and certain intangible assets not be amortized. Instead, these assets will be reviewed for impairment annually with any related losses recognized in earnings when incurred. The statements will be effective for Caliper as of January 1, 2002 for any existing goodwill and intangible assets and for business combinations initiated after June 30, 2001. Caliper has not recorded goodwill and other intangibles prior to September 31, 2001. Additionally, the Company does not have any business combinations as of September 30, 2001. Caliper will adopt the provisions of SFAS No. 141 for any business combination initiated after June 30, 2001. Caliper is currently analyzing the impact these statements will have; however, the impact is not expected to be material on Caliper's financial position or results of operations. 9 In July 2001, the FASB also issued SFAS No. 143, "Accounting for Asset Retirement Obligations" and in August 2001, issued No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and is effective for financial statements issued for years beginning after June 15, 2002. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, superseding SFAS No. 121 and is effective for Caliper January 1, 2002.Caliper is currently analyzing the impact these statements will have; however, the impact is not expected to be material on Caliper's financial position or results of operations. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2001 and for the three and nine month periods ended September 30, 2001 and September 30, 2000 should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2000. Except for historical information, the discussion in this report contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report. Our actual results could differ materially from those discussed here. Factors that could cause or contribute to these differences include those discussed in " -- Factors Affecting Operating Results" below as well as those discussed elsewhere. OVERVIEW We are a leader in lab-on-a-chip technologies that miniaturize, integrate and automate many laboratory processes. We develop, manufacture and sell our proprietary LabChip(R) systems to pharmaceutical and other companies. We believe our LabChip(R) systems have the potential to assemble the power and reduce the scale of entire laboratories full of equipment and people. From inception in July 1995 through September 2001, our operating activities were primarily devoted to research, development and commercialization of technologies involving the manipulation of very small amounts of fluid, which are referred to as "microfluidic technologies," and first-generation products such as the Agilent 2100 Bioanalyzer, LabChip(R) kits and our high throughput screening systems, recruiting personnel, business development, raising capital and acquiring assets. In 1999, we recognized revenue from our first product sales when we sold initial versions of our high throughput system for drug screening to three of our Technology Access Program customers, Amgen, Eli Lilly and Roche. In addition, in September 1999, Agilent Technologies, Inc., our commercial partner, introduced our first LabChip(R) system for use by individual researchers. In March 2000, we recognized revenue from our first multi-capillary sipper chip system and Millennium Pharmaceuticals joined our Technology Access Program, becoming our fourth Technology Access Program customer, and also joined our joint applications development program, which was formalized later in the year as our Applications Developer Program. In May 2000, we introduced the DNA 500 LabChip(R) kit for the automated analysis of small DNA fragments to determine their size and concentration. In August 2000, we introduced the Protein 200 LabChip(R) kit for the automated sizing and analysis of protein samples. In September 2000, we introduced the Automated Microfluidics System 90 to perform automated high throughput nucleic acid analysis. In December 2000, GlaxoSmithKline became our second Applications Developer Program customer, with the goal of developing new applications in synthetic chemistry using our LabChip(R) technology. On January 7, 2001, we announced a comprehensive settlement agreement with Aclara Biosciences on all pending litigation between the two companies. As a result, Aclara will pay us $37.5 million over the next three years in a combination of stock, cash, and committed minimum royalties. We shipped our first Automated Microfluidics System 90 and our first microfluidics development workstation, the Caliper 42, in March 2001. In April 2001, we introduced the DNA 1000 LabChip(R) kit for the automated analysis of DNA fragments to determine their size and concentration. In July 2001, we announced the establishment of an Applications Developer Program collaboration with the National Aeronautics and Space Administration (NASA) to use our LabChip(R) technology to perform protein crystallization in a microgravity environment. In August 2001, we introduced the RNA Nano LabChip(R) kit, an enhanced application for the automated analysis of RNA fragments to determine their size and concentration. In August 2001, we also introduced new software to improve the efficiency of the Agilent 2100 Bioanalyzer In September 2001, as anticipated, we initiated a new commercial program for selling our high throughput screening (HTS) products. This program is intended to replace our fee-based Technology Access Program with direct sales of instruments, chips, services and custom solutions to customers based upon a product catalogue and established price list. We also introduced a new instrument platform, the Caliper 250 HTS System, which includes instruments for assay development and screening, and a menu of chips that perform standard assays. The Caliper 250 HTS System uses a 4-sipper chip capable of performing tens of thousands of experiments per chip per day, depending upon assay conditions, and offers walkaway automation and minimal user intervention. The Caliper 250 HTS System is being commercialized by our own sales and marketing force. We are also offering a full range of customer and field support services and a specialized HTS solutions program that includes specific assay development support, early access to beta products and customized microfluidic solutions for customers' individual research challenges. The first sales of the Caliper 250 HTS System were made to Amphora Discovery Corp. 11 In September 2001, we announced the formation of a new company, Amphora Discovery Corp., to create and commercialize a comprehensive database of chemical genomics information. The Amphora database is being designed for use in preclinical drug discovery and is intended to include a comprehensive collection of information about important aspects of a library of small molecules and their interactions with therapeutic targets. Amphora plans to sell this database information directly to pharmaceutical companies, biotechnology firms and academic laboratories involved in preclinical and clinical research in life sciences. It also plans to sell analysis tools, reagents from the Amphora compound library, and licenses to proprietary compounds and targets. Amphora intends to use Caliper's LabChip(R) HTS systems to create, build and expand its chemical genomics database. Amphora has agreed to purchase a minimum number of Caliper instruments and datapoints in its first few years of operations and we expect that Amphora will be one of our major HTS customers. Since our inception, we have incurred significant losses and, as of September 30, 2001, we had an accumulated deficit of $36.6 million. Our losses have resulted principally from costs incurred in research and development, manufacturing scale-up, and from general and administrative costs associated with our operations. We expect to continue to incur substantial research and development, manufacturing scale-up, and general and administrative costs. As a result, we will need to generate significantly higher revenue to achieve profitability. Historically, prior to the quarter ended September 30, 2001, our revenue has been derived principally from contract revenue earned under our collaboration agreement with Agilent and from our Technology Access Program customers and, to a lesser extent, from the sale of products and government grants. During the third quarter ended September 30, 2001, largely due to the sales of high throughput screening systems to Amphora Discovery Corp., a larger portion of our revenue, about 50%, was derived from product sales. In addition, during the quarter ended March 31, 2001, we derived revenue of $5.0 million from our initial licensing of the Ramsey family of patents to Aclara. This licensing revenue will not recur in year 2001. Although we are developing and plan to introduce future products, we cannot provide assurance that we will be successful in these efforts. To date, we have generated a substantial portion of our revenue from a limited number of sources. During the nine months ended September 30, 2001, our licensing of the Ramsey family of patents to Aclara accounted for 23% of our revenue, Agilent alone accounted for 33% of our revenue, our Technology Access Program customers collectively accounted for 25% of our revenue, and sales to Amphora accounted for 7% of our revenue. During the nine months ended September 30, 2000 Agilent alone accounted for 45% of our revenue in this period and two Technology Access Program customers collectively accounted for 42% of our revenue. During the quarter ended September 30, 2001, within the context of our planned discontinuation of our Technology Access Program and conversion to a commercial HTS products business structure, we initiated the renegotiation of our Technology Access Program agreements with Amgen, Eli Lilly and Millennium Pharmaceuticals. The original agreement with Amgen expires in December 2001 and the agreement with Millennium expires in March 2002. Negotiations with these two companies are ongoing and we anticipate completing the restructuring of these contracts before year-end 2001. The contract with Eli Lilly has been completed and includes a commitment for their ongoing participation as a customer of Caliper's high throughput screening commercial business for 12 months. Historically, under our Technology Access Program agreements, we recognized as revenue non-refundable license fees over the contract period, product sales upon the transfer of title to the customer, and development and support fees in the period in which the costs were incurred. Subscription fees and development and support fees could be received annually or quarterly in advance depending upon the terms of the agreement. We recorded payments received in advance under all of these agreements as deferred revenue until earned. Currently, with the new HTS commercial structure, customers will purchase instruments, chips, support services and custom solutions directly from Caliper, and they will be charged on a data point pricing basis for their usage of chips. We will offer discounts based on the volume of products and services purchased. Under our collaboration agreement, Agilent funds our research and development expenditures related to the collaboration, reimburses us for our costs of supplying chips and reagents to Agilent and pays us a share of the gross margin earned on all components of LabChip(R) systems they sell. We record revenue from development and support activities under our collaboration agreement in the period in which the costs are incurred. We report direct costs associated with this contract as research and development expense. We recognize revenue related to the reimbursement of costs for the supply of chips and reagents to Agilent upon shipment. We recognize as revenue our share of gross margin on components of the LabChip(R) system sold by Agilent upon shipment to the end user. Agilent began marketing and sales efforts for the Agilent 2100 Bioanalyzer in late 1999. Sales of new and innovative instrumentation such as the Agilent 2100 Bioanalyzer involve a long sales cycle, requiring customer training and demonstration periods. Sales of the Agilent 2100 Bioanalyzer increased during the course of 2000 and the nine months of 2001 indicating, we believe, a growing market acceptance of this technology. 12 RESULTS OF OPERATIONS Three and Nine Months Ended September 30, 2001 and 2000 Revenue. Total revenue was $6.6 million and $21.7 million for the three and nine months ended September 30, 2001, respectively, compared to $5.5 million and $13.6 million for the three and nine months ended September 30, 2000. The increase of $1.1 million during the three months ended September 30, 2001 compared to the same period in 2000 resulted principally from product sales growth both to Amphora Discovery Corp., a related party, and third party customers, offset by declining contract revenues from Technology Access Program customers. Related party revenue was $2.0 million for the three and nine months ended September 30, 2001 resulting from sales of the Caliper 250 HTS System products to Amphora Discovery Corp. There were no related party revenues for the corresponding periods of 2000. Product revenue from unrelated customers was $1.6 million and $4.8 million for the three and nine months ended September 30, 2001, respectively, compared to $1.2 million and $2.0 million for the three and nine months ended September 30, 2000. This increase of $400,000 and $2.8 million during the three and nine months ended September 30, 2001 compared to the same periods in 2000 is from product volume growth under our commercial collaboration with Agilent, and from sales of our Automated Microfluidics Systems 90 and Applications Developer Program, both of which were introduced in the first quarter of 2001. License fees and contract revenues decreased to $3.0 million for the quarter ended September 30, 2001, compared to $4.3 million for the same period in 2000 due to the anticipated $735,000 decrease resulting from a one time research and development reimbursement in 2000 under our collaboration with Agilent Technologies. Additionally, we experienced a 35% decline in our Technology Access Program revenue in the period as a result of our conversion from a fee-based technology access program model to a commercial high throughput screening products business and the associated change in revenue recognition methods. For the nine months ended September 30, 2001 license fees and contract revenues increased to $14.9 million compared to $11.6 million for the same period in 2000. The increase of $3.3 million resulted from the $5.0 million licensing fee for the Ramsey family of patents to Aclara, offset by a decrease in the research and development reimbursement from our collaboration with Agilent Technologies noted above and a 25% decline in our Technology Access Program revenue. Cost of Product Revenues. Cost of products sold was $1.4 million for the related party sales to Amphora Discovery Corp. for the three and nine months ended September 30, 2001. The profit margins on product sales to Amphora will vary due to the volume of products purchased and the corresponding commercial volume discounts earned. Cost of all other products sold were $893,000 and $2.9 million for the three and nine months ended September 30, 2001, respectively, compared to $839,000 and $1.7 million in the same periods of 2000. The improved profit margins from product sales to unrelated customers for the quarter ended September 30, 2001 of $688,000, compared to $370,000 in the same period of 2000 was primarily due to the increased sales of Agilent 2100 Bioanalyzer systems and sales of Caliper's own products. Product mix will affect future profit margins as Caliper earns a higher return from its own products sold as opposed to sharing gross margin revenues on collaboration products with Agilent Technologies. For the nine months ended September 30, 2001, profit margins improved from the mix of increased Caliper product sales and increased Agilent 2100 Bioanalyzer systems compared to the same period in 2000. Research and Development Expenses. Research and development expenses consist primarily of salaries and related personnel costs, fees paid to consultants and outside service providers for chip development, material costs for prototype and test units, legal expenses resulting from intellectual property prosecution, and other expenses related to the design, development, testing and enhancement of our products. Research and development expenses were $10.0 million and $28.4 million for the three and nine months ended September 30, 2001, respectively, compared to $9.0 million and $22.7 million for the three and nine months ended September 30, 2000. The increase of $1.0 million during the three months ended September 30, 2001 compared to the same period in 2000 was attributable to continued growth of research and development activities, including $2.1 million related to growth in personnel and services to support our Technology Access Program, partner collaboration and initial product launches, offset by a decrease in litigation related legal costs due to the settlement with Aclara Biosciences on all litigation. The increase of $5.7 million during the nine months ended September 20, 2001 compared to the same period in 2000 resulted from $6.1 million related to growth in personnel and services to support our Technology Access Program, partner collaboration and product launches as a result of a 43% increase in headcount from September 30, 2000, offset by decreased litigation costs. We expect research and development spending to increase over the next year as we continue to focus and expand our research and the product development efforts. Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, recruiting expenses, marketing and product promotional costs, professional fees, and other corporate expenses including business development and general legal activities. Selling, general and administrative expenses were $4.3 million and $10.7 million for the three and nine months ended September 30, 2001, respectively, compared to $2.5 million and $7.3 million for the three and nine months ended September 30, 2000. The increase of $1.8 million during the three months ended September 30, 2001 compared to the same period in 2000 resulted from $485,000 related to compensation for general and administrative personnel, $435,000 in expanded product promotion and marketing research efforts, and the remaining balance due to overall expansion in our operations. The increase of $3.4 million during the nine months ended September 20, 2001 compared to the same period in 2000 resulted from $1.2 million related to compensation for general and administrative personnel as a result of a 22% increase in headcount from September 30, 2000. The remaining $2.2 million increase consisted of $1.1 million for expanded product promotion and market research efforts with remainder due to overall expansion in our operations and facilities. We expect selling and administrative expenses to continue to increase over the next several years to support our growing business activities, the commercialization of our products, and due to the costs associated with operating as a public company. 13 Amortization of Deferred Stock Compensation. Deferred stock compensation represents the difference between the deemed fair value of our common stock for accounting purposes and the exercise price of options at the date of grant. During 1998 and 1999, we recorded deferred stock compensation totaling $13.2 million. This amount is being amortized over the respective vesting periods of the individual stock options using the graded vesting method. We recorded amortization of deferred compensation of $587,000 and $2.0 million, respectively, for the three and nine months ended September 30, 2001, compared to $1.0 million and $3.7 million for the three and nine months ended September 30, 2000. We expect to record amortization expense for deferred compensation as follows: $513,000 for the last quarter of 2001, $1.4 million during 2002, $670,000 during 2003 and $122,000 during 2004. The amount of deferred compensation expense to be recorded in future periods may decrease if unvested options for which deferred compensation has been recorded are subsequently canceled. Interest Income, Net. Net interest income consists of income from our cash and investments offset by expenses related to our financing obligations. Net interest income was $2.2 million and $7.9 million for the three and nine months ended September 30, 2001, respectively, compared to $1.9 million and $4.5 million for the three and nine months ended September 30, 2000. The increase primarily resulted from interest income on the proceeds of $104.9 million raised in August 2000 from the sale of 2,300,000 shares of common stock in a private placement. Gain on Settlement of Litigation. The litigation settlement was $27.5 million for the nine months ended September 30, 2001, resulting from the comprehensive settlement agreement with Aclara for the dismissal of all suits and countersuits between the two companies, which occurred in January 2001. The $12.0 million litigation settlement for the three and nine months ended September 30, 2000 resulted from a settlement agreement with our former patent counsel, Bertram Rowland, and his former law firm, Flehr, Hohbach, Test, Albritton and Herbert, which occurred in September 2000. LIQUIDITY AND CAPITAL RESOURCES Our cash, cash equivalents and marketable securities were $170.4 million at September 30, 2001 compared to $191.7 million at December 31, 2000. We used cash of $18.9 million for operations for the nine-month period ended September 30, 2001 as compared to $12.8 for the comparable period in 2000. Cash used in the nine months ended September 30, 2001 consisted primarily of the net income of $11.8 million and $4.6 million from amortization of deferred stock compensation, stock options issued to non-employees and depreciation and amortization expense, more than offset by non-cash charges of $27.5 million related to gain on litigation settlement, $5.0 million non-cash revenue, and $2.8 million from changes in operating assets and liabilities. Caliper also has $3.2 million in a market rate account at September 30, 2001 pledged for facilities deposits compared to $3.0 million at December 31, 2000. As of September 30, 2001, we have a committed capital resource of $32.5 million as a result of a litigation settlement. As a component of the settlement agreement, Aclara has effectively guaranteed the value of the Aclara common stock to be $32.5 million at the time of our sale of the stock, provided that the sale occurs in the period from 18 months to 24 months from the effective date of the settlement agreement. Aclara has entered into a fully-funded $32.5 million standby letter of credit in favor of us to secure its performance under this potential obligation. 14 Net cash used in investing activities was $14.0 million for the nine months ended September 30, 2001 as compared to $88.9 million for the comparable period in 2000. Net cash used in investing consists primarily of purchases of available-for-sale investments as well as capital expenditures offset by proceeds from sales and maturities of available-for-sale investments. Net cash provided by financing activities was $1.8 million for the nine months ended September 30, 2001 as compared to $105.6 million for the comparable period in 2000. Net proceeds from financing activities for the nine months ended September 30, 2001 consisted of $1.7 million from equipment financing and $1.5 million from employee stock option exercises, offset by repayments of equipment financing arrangements of $1.4 million. Net proceeds from financing activities for the nine months ended September 30, 2000 consisted principally of approximately $104.9 million raised from the sale of 2,300,000 shares of common stock in a private placement, which occurred in August 2000. Our capital requirements depend on numerous factors, including market acceptance of our products, the resources we devote to developing and supporting our products, and other factors. We expect to devote substantial capital resources to continue our research and development efforts, to expand our support and product development activities, to expand the commercialization of our LabChip(R) systems and products and for other general corporate activities. We believe that our current cash balances, together with the revenue to be derived from our collaboration with Agilent and our Technology Access Program agreements and our licensing initiatives will be sufficient to fund our operations at least through the year 2002. During or after this period, if cash generated by operations is insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities or obtain additional credit arrangements. Additional financing may not be available on terms acceptable to us or at all. The sale of additional equity or convertible debt securities may result in additional dilution to our stockholders. FACTORS AFFECTING OPERATING RESULTS OUR LABCHIP(R) SYSTEMS MAY NOT ACHIEVE MARKET ACCEPTANCE, WHICH COULD CAUSE OUR REVENUE TO GROW SLOWLY OR DECLINE. Our technologies are still in the early stages of development, and most of our LabChip(R) systems incorporating these technologies have only recently been made commercially available. If our LabChip(R) systems do not gain market acceptance, we will be unable to generate sales and our revenue will decline. The commercial success of our LabChip(R) systems will depend upon market acceptance of the merits of our LabChip(R) systems by pharmaceutical and biotechnology companies, academic research centers and other companies that rely upon laboratory experimentation. We have not yet demonstrated these benefits. Market acceptance will depend on many factors, including: - our ability to demonstrate the advantages and potential economic value of our LabChip(R) systems over alternative well-established technologies and products - the extent of Agilent's efforts to market the Agilent 2100 Bioanalyzer - our ability to market our HTS systems through our commercial programs - general economic conditions, which have deteriorated over the last year Because the products comprising our LabChip(R) systems have been in operation for a limited period of time, their accuracy, reliability, ease of use and commercial value have not been fully established. If the Agilent 2100 Bioanalyzer customers or our Technology Access Program customers do not approve of our LabChip(R) systems because these systems fail to generate the quantities and quality of data they expect, are too difficult or costly to use, or are otherwise deficient, market acceptance of these LabChip(R) systems would suffer and further sales may be limited. We cannot provide assurance that these customers' efforts to put our LabChip(R) systems into use will continue or will be expeditious or effective. Potential customers for our high throughput systems may also wait for indications from our four initial Technology Access Program customers that our high throughput systems work effectively and generate substantial benefits. Further, non-acceptance by the market of our LabChip(R) systems could undermine not only those systems but subsequent LabChip(R) systems as well. WE EXPECT TO INCUR FUTURE OPERATING LOSSES AND MAY NOT ACHIEVE PROFITABILITY. 15 We have experienced significant operating losses each year since our inception and expect to incur additional operating losses this year, primarily as a result of expected increases in expenses for manufacturing capabilities, research and product development costs and general and administrative costs. We may not achieve profitability. For example, we experienced net losses of approximately $3.0 million in 1998, $14.4 million in 1999, $13.3 million in 2000, and $11.8 million in the first nine months of 2001. As of September 30, 2001, we had an accumulated deficit of approximately $36.6 million. Our losses have resulted principally from costs incurred in research and development and from general and administrative costs associated with our operations. These costs have exceeded our litigation settlement and reimbursement, interest income and revenue which, to date, have been generated principally from collaborative research and development agreements, technology access fees, cash and investment balances and, to a lesser extent, product sales and government grants. OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY AND ANY FAILURE TO MEET FINANCIAL EXPECTATIONS MAY DISAPPOINT SECURITIES ANALYSTS OR INVESTORS AND RESULT IN A DECLINE IN OUR STOCK PRICE. Our quarterly operating results have fluctuated significantly in the past and we expect they will fluctuate in the future as a result of many factors, some of which are outside of our control. For example, our revenues have varied dramatically as a result of new customers joining our Technology Access Program and product shipments. It is possible that in some future quarter or quarters, our operating results will be below the expectations of securities analysts or investors. In this event, the market price of our common stock may fall abruptly and significantly. Because our revenue and operating results are difficult to predict, we believe that period-to-period comparisons of our results of operations are not a good indication of our future performance. If revenue declines in a quarter, whether due to a delay in recognizing expected revenue or otherwise, our earnings will decline because many of our expenses are relatively fixed. In particular, research and development and general and administrative expenses and amortization of deferred stock compensation are not affected directly by variations in revenue. OUR PRODUCTS COULD INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH MAY CAUSE US TO ENGAGE IN COSTLY LITIGATION AND, IF WE ARE NOT SUCCESSFUL, COULD ALSO CAUSE US TO PAY SUBSTANTIAL DAMAGES AND PROHIBIT US FROM SELLING OUR PRODUCTS. Third parties may assert infringement or other intellectual property claims against us, such as the Aclara litigation that was recently settled and is described under "Part I -- Item 1. Financial Statements (Note 5)." We may have to pay substantial damages, including treble damages, for past infringement if it is ultimately determined that our products infringe a third party's proprietary rights. Further, we may be prohibited from selling our products before we obtain a license, which, if available at all, may require us to pay substantial royalties. Even if these claims are without merit, defending a lawsuit takes significant time, may be expensive and may divert management attention from other business concerns. We are aware of third-party patents that may relate to our technology or potential products. We have also been notified that third parties have attempted to provoke an interference with one issued U.S. patent that we have exclusively licensed to determine the priority of inventions. Any public announcements related to litigation or interference proceedings initiated or threatened against us could cause our stock price to decline. We recently settled intellectual property litigation with Aclara concerning one family of Aclara patents. However, Aclara could assert other patent infringement claims against us in the future in alternative dispute resolution proceedings established under our settlement agreement. If we are found to be infringing any valid patent claims asserted by Aclara in alternative dispute resolution proceedings, we may be prohibited from selling our products before we obtain a license, which, if available at all, may require us to pay substantial royalties. WE MAY NEED TO INITIATE LAWSUITS TO PROTECT OR ENFORCE OUR PATENTS, WHICH WOULD BE EXPENSIVE AND, IF WE LOSE, MAY CAUSE US TO LOSE SOME OF OUR INTELLECTUAL PROPERTY RIGHTS, WHICH WOULD REDUCE OUR ABILITY TO COMPETE IN THE MARKET. We rely on patents to protect a large part of our intellectual property and our competitive position. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as the patent infringement suit against Aclara that was recently settled and is described under "Part I -- Item 1. Financial Statements (Note 5)." These lawsuits could be expensive, take significant time, and could divert management's attention from other business concerns. They would put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. We may also provoke these third parties to assert claims against us. Patent law relating to the scope of claims in the technology fields in which we operate is still evolving and, consequently, patent positions in our industry are generally uncertain. We cannot provide assurance that we will prevail in any of these suits or that the damages or other remedies awarded, if any, will be commercially valuable. During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation. If securities analysts or investors perceive any of these results to be negative, it could cause our stock price to decline. 16 THE RIGHTS WE RELY UPON TO PROTECT OUR INTELLECTUAL PROPERTY UNDERLYING OUR PRODUCTS MAY NOT BE ADEQUATE, WHICH COULD ENABLE THIRD PARTIES TO USE OUR TECHNOLOGY AND WOULD REDUCE OUR ABILITY TO COMPETE IN THE MARKET. In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, nondisclosure agreements and other contractual provisions and technical measures to protect our intellectual property rights. Nevertheless, these measures may not be adequate to safeguard the technology underlying our products. If they do not protect our rights, third parties could use our technology, and our ability to compete in the market would be reduced. In addition, employees, consultants and others who participate in the development of our products may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies for the breach. We also may not be able to effectively protect our intellectual property rights in some foreign countries. For a variety of reasons, we may decide not to file for patent, copyright or trademark protection outside of the United States. We also realize that our trade secrets may become known through other means not currently foreseen by us. Notwithstanding our efforts to protect our intellectual property, our competitors may independently develop similar or alternative technologies or products that are equal or superior to our technology and products without infringing on any of our intellectual property rights or design around our proprietary technologies. IF WE DO NOT SUCCESSFULLY INTRODUCE NEW PRODUCTS AND EXPAND THE RANGE OF APPLICATIONS FOR OUR LABCHIP(R) SYSTEMS, WE MAY EXPERIENCE A DECLINE IN REVENUE OR SLOW REVENUE GROWTH AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY. We intend to develop LabChip(R) systems with increasingly high throughput capabilities and develop a broad range of applications for our LabChip(R) technology. If we are unable to do so, our LabChip(R) systems may not become widely used and we may experience a decline in revenue or slow revenue growth and may not achieve or maintain profitability. In order for our high throughput systems to achieve the levels of throughput necessary to meet customers' demands, we may need to develop and manufacture sipper chips with more than four capillaries. Our current high throughput systems operate with sipper chips with either one or four capillaries, small glass tubes used to draw compounds into the chip. In order to achieve the levels of throughput that our customers desire, we may need to develop a LabChip(R) system accommodating more than four capillaries, which we may not be able to do. If we cannot cost-effectively deliver chips with more than four capillaries, we may not be able to attract new customers to purchase our high throughput systems, which would seriously harm our future prospects. Further, our existing Technology Access Program customers may decide not to renew their annual access subscriptions, which would seriously reduce our revenue. We must develop new applications for existing LabChip(R) instruments, which we may not be able to do. The Agilent 2100 Bioanalyzer uses LabChip(R) kits that we specifically design for each application. We currently have LabChip(R) kits commercially available for nine applications relating to DNA, RNA and protein sizing and quantification. DNA and RNA are commonly used acronyms for chemicals that contain, or transmit, genetic information in living things. We currently are developing LabChip(R) kits for other applications. If we are unable to develop LabChip(R) kits for specific applications required by potential customers, those customers may not purchase the Agilent 2100 Bioanalyzer. We must also continue to develop applications for our high throughput systems. If we are not able to complete the development of these applications, or if we experience difficulties or delays, we may lose our current Technology Access Program customers and may not be able to obtain new customers. WE RELY HEAVILY ON AGILENT TO MANUFACTURE, MARKET AND DISTRIBUTE THE AGILENT 2100 BIOANALYZER. IF AGILENT FAILS TO PERFORM UNDER OUR AGREEMENT OR SUCCESSFULLY COMMERCIALIZE OUR COLLABORATIVE PRODUCTS, OUR REVENUE FROM THE AGILENT 2100 BIOANALYZER MAY NOT BE MATERIAL AND WE MAY LOSE THE DEVELOPMENT FUNDING WE CURRENTLY RECEIVE FROM AGILENT. Agilent manufactures, markets and distributes the Agilent 2100 Bioanalyzer under an agreement we entered into in May 1998. We also rely on Agilent for significant financial and technical contributions in the development of products covered by the agreement. Our ability to develop, manufacture and market these products successfully depends significantly on Agilent's performance under this agreement. Sales of new and innovative instrumentation such as the Agilent 2100 Bioanalyzer involve a long sales cycle, requiring customer training and demonstration periods. Although sales of the Agilent 2100 Bioanalyzer increased in 2000 and the first nine months of 2001, we cannot predict whether this trend will continue at its current pace, if at all. If Agilent experiences manufacturing or distribution difficulties, does not actively market the Agilent 2100 Bioanalyzer, or does not otherwise perform under this agreement, our revenue from the Agilent 2100 Bioanalyzer may not be material. In addition, Agilent may terminate the agreement at their discretion at any time. If Agilent terminates this agreement, we would need to obtain development funding from other sources, 17 and we may be required to find one or more other collaborators for the development and commercialization of our products. Our inability to enter into agreements with commercialization partners or develop our own marketing, sales, and distribution capabilities would increase costs and impede the commercialization of our products. AGILENT MAY COMPETE WITH US IF OUR COLLABORATION TERMINATES AFTER MAY 2003, WHICH COULD REDUCE THE POTENTIAL REVENUE FROM OUR INDEPENDENT PRODUCT SALES. Under the terms of our agreement with Agilent, if they, or we, terminate our agreement after May 2003, we will grant to Agilent a non-exclusive license to our LabChip(R) technologies as then developed for use in the research products field. Consequently, there is the possibility that we may experience competition from Agilent after May 2003, which would reduce our ability to sell products independently or through other commercial partners. IF AGILENT DETERMINES THAT WE MAY BE VIOLATING A THIRD-PARTY PATENT, IT MAY TERMINATE SALES OF THE AGILENT 2100 BIOANALYZER, WHICH WILL DECREASE OUR REVENUE. Under our collaboration agreement with Agilent, Agilent may elect at any time to stop developing, manufacturing or distributing any product that it reasonably determines, on the advice of counsel, poses a substantial risk of infringing a third-party patent. For example, if a third party claims that we are violating their patent, then Agilent may terminate marketing and selling of the Agilent 2100 Bioanalyzer system, which Agilent began marketing in September 1999, which will decrease our future revenue. WE HAVE LIMITED EXPERIENCE IN MANUFACTURING OUR PRODUCTS AND MAY ENCOUNTER MANUFACTURING PROBLEMS OR DELAYS, WHICH COULD RESULT IN LOST REVENUE. Although Agilent manufactures the Agilent 2100 Bioanalyzer, we manufacture the chips used in this instrument and also currently manufacture instruments and sipper chips for our high throughput systems. We currently have limited manufacturing capacity for our LabChip(R) system products and experience variability in manufacturing yields for chips. If we fail to deliver chips and high throughput screening products in a timely manner, our relationships with our customers could be seriously harmed, and revenue would decline. We currently have one manufacturing location in Mountain View, California. The actual number of chips we are able to sell or use depends in part upon the manufacturing yields for these chips. We have only recently begun to manufacture significant numbers of sipper chips and are continuing to develop our manufacturing procedures for these chips. In order to offer sipper chips with more than four capillaries for high throughput applications, we will need to continue to achieve consistently high yields in this process. We cannot provide assurance that manufacturing or quality problems will not arise as we attempt to scale-up our production of chips or that we can scale-up manufacturing in a timely manner or at commercially reasonable costs. If we are unable to consistently manufacture sipper chips or chips for the Agilent 2100 Bioanalyzer on a timely basis because of these or other factors, our product sales will decline. We are currently manufacturing high throughput instruments in-house and in limited volumes. If demand for our high throughput instruments increases, we will either need to expand our in-house manufacturing capabilities or outsource to Agilent or other manufacturers. WE ARE DEPENDENT ON A SOLE-SOURCE SUPPLIER FOR OUR GLASS AND IF WE ARE UNABLE TO BUY THIS COMPONENT ON A TIMELY BASIS, WE WILL NOT BE ABLE TO DELIVER OUR PRODUCTS TO CUSTOMERS. We currently purchase a key component for our chips from a sole-source supplier located in Germany. Although we keep surplus inventory in our Mountain View manufacturing facility, if we are unable to replenish this component on a timely basis, we will not be able to deliver our chips to our customers which would harm our business. IF A NATURAL DISASTER STRIKES OUR MANUFACTURING FACILITY WE WOULD BE UNABLE TO MANUFACTURE OUR PRODUCTS FOR A SUBSTANTIAL AMOUNT OF TIME AND WE WOULD EXPERIENCE LOST REVENUE. We rely on a single manufacturing location to produce our chips and high throughput systems, and have no alternative facilities. The facility and some pieces of manufacturing equipment are difficult to replace and could require substantial replacement lead-time. Our manufacturing facility may be affected by natural disasters such as earthquakes and floods. Earthquakes are of particular significance since the manufacturing facility is located in Mountain View, California, an earthquake-prone area. In the event our existing manufacturing facility or equipment is affected by man-made or natural disasters, we would be unable to manufacture products for sale, meet customer demands or sales projections. If our manufacturing operations were curtailed or ceased, it would harm our business. 18 BECAUSE A SMALL NUMBER OF CUSTOMERS AND AGILENT HAVE ACCOUNTED FOR, AND ARE LIKELY TO CONTINUE TO ACCOUNT FOR, A SUBSTANTIAL PORTION OF OUR REVENUE, OUR REVENUE COULD DECLINE DUE TO THE LOSS OF ONE OF THESE CUSTOMERS OR THE TERMINATION OF OUR AGREEMENT WITH AGILENT. Historically we have had very few customers and one commercial partner, Agilent, from which we have derived the majority of our revenue and, if we were to lose any one of these, our revenue would decrease substantially. For the nine months ended September 30, 2001, Agilent, our Technology Access Program customers, and our initial licensing of the Ramsey family of patents to Aclara in connection with our litigation settlement with them, accounted for 81% of our total revenue. Agilent and three customers accounted for 90% of total revenue for the year ended December 31, 2000. Agilent and four customers accounted for 88% of total revenue in 1999. We and Agilent introduced the Agilent 2100 Bioanalyzer system in September 1999 and have received only modest revenue from the sale of this product on a commercial scale. Although we anticipate that future sales of the Agilent 2100 Bioanalyzer system will further expand our revenue base, we expect that we will continue to rely on our large customers and on Agilent for the majority of our revenue. WE HAVE REACHED THE FINAL CONTRACT YEAR FOR SOME OF OUR TECHNOLOGY ACCESS PROGRAM AGREEMENTS. The third and final year of our Technology Access Program agreement with Amgen began on January 1, 2001. In addition, the third and final year of our Technology Access Program agreement with Eli Lilly began on August 12, 2001. Although we believe that these customers will continue to use LabChip(R) products and services, we may not derive significant revenue from them in the future. WE DEPEND ON OUR KEY PERSONNEL, THE LOSS OF WHOM WOULD IMPAIR OUR ABILITY TO COMPETE. We are highly dependent on the principal members of our management and scientific staff. The loss of services of any of these persons could seriously harm our product development and commercialization efforts. In addition, research, product development and commercialization will require additional skilled personnel in areas such as chemistry and biology, software engineering and electronic engineering. Our business is located in Silicon Valley, California, where demand for personnel with these skills is extremely high and is likely to remain high. As a result, competition for and retention of personnel, particularly for employees with technical expertise, is intense and the turnover rate for these people is high. If we are unable to hire, train and retain a sufficient number of qualified employees, our ability to conduct and expand our business could be seriously reduced. The inability to retain and hire qualified personnel could also hinder the planned expansion of our business. POTENTIAL ACQUISITIONS MAY HAVE UNEXPECTED CONSEQUENCES OR IMPOSE ADDITIONAL COSTS ON US. Our business is dependent upon growth in the market for microfluidic products and our ability to enhance our existing products and introduce new products on a timely basis. One of the ways we may address the need to develop new products is through acquisitions of complementary businesses and technologies. From time to time, we may consider and evaluate potential acquisitions or business combinations, which may include a possible merger or consolidation of our business with another entity. We may engage in discussions relating to these types of transactions in the future. Acquisitions involve numerous risks, including the following: - difficulties in integration of the operations, technologies, and products of the acquired companies - the risk of diverting management's attention from normal daily operations of the business - accounting consequences, including charges for in-process research and development expenses, resulting in variability in our quarterly earnings - potential difficulties in completing projects associated with purchased in-process research and development - risks of entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions - the potential loss of key employees of the acquired company - the assumption of unforeseen liabilities of the acquired company 19 We cannot provide assurance that future acquisitions or business combinations in which we are involved, if any, will be successful and will not adversely affect our financial condition or results of operations. Failure to manage growth effectively and successfully integrate acquisitions we make could harm our business and operating results. RISKS RELATED TO OWNING OUR COMMON STOCK OUR STOCK PRICE IS EXTREMELY VOLATILE, AND INVESTORS COULD LOSE A SUBSTANTIAL PORTION OF THEIR INVESTMENT. Our stock has been trading on the Nasdaq National Market only since mid-December 1999. We initially offered our common stock to the public at $16.00 per share. Since then our stock price has been extremely volatile and has ranged, through October 31, 2001, from a high of approximately $202.00 per share on March 2, 2000 to a low of $8.40 per share on September 21, 2001. Our stock price may drop substantially following an investment in our common stock. We expect that our stock price will remain volatile as a result of a number of factors, including: - announcements by analysts regarding their assessment of Caliper and its prospects - announcements of our financial results or other corporate developments, particularly if they differ from investors' expectations - general market volatility for technology stocks WE HAVE BEEN SUED, AND ARE AT RISK OF FUTURE SECURITIES CLASS ACTION LITIGATION In the Spring and Summer of 2001, class action lawsuits against certain leading investment banks and over 100 companies that did public offerings during the prior several years were filed, including lawsuits against Caliper and certain of its officers and directors. See "Part II - Item 1. Legal Proceedings" for a description of these lawsuits. This and other securities litigation could result in potential liability, cause us to incur litigation costs and divert management's attention and resources, any of which could harm our business. In addition, announcements of future lawsuits of this or some other nature, and announcements of events occurring during the course of the current and any future lawsuits, could cause our stock price to drop. PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY INHIBIT A TAKEOVER, WHICH COULD LIMIT THE PRICE INVESTORS MIGHT BE WILLING TO PAY IN THE FUTURE FOR OUR COMMON STOCK. Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing an acquisition, merger in which we are not the surviving company or changes in our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of the outstanding voting stock, from consummating a merger or combination including us. These provisions could limit the price that investors might be willing to pay in the future for our common stock. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the principal amount of our investment will probably decline. Declines of interest rates over time will reduce our interest income from our investments. To minimize this risk in the future, we intend to maintain our portfolio of cash equivalents and investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities. 20 The table below presents our investment portfolio by expected maturity and related weighted average interest rates at September 30, 2001:
FAIR 2001 2002 2003 2004 TOTAL VALUE ---- ---- ---- ---- ----- ----- Money market fund ...................... $ 5,156 __ __ __ $ 5,156 $ 5,156 Average interest rate .................. 3.55% __ __ __ 3.55% Available for sale marketable securities $27,662 $62,279 $44,520 $31,384 $165,845 $165,845 Average interest rate .................. 4.45% 5.72% 6.12% 5.19% 5.51% Total securities ....................... $32,818 $59,470 $27,768 $26,917 $171,001 $171,001 Average interest rate .................. 4.31% 5.72% 6.12% 5.19% 5.45%
Our equipment financings, amounting to $5.5 million as of September 30, 2001, are all at fixed rates and therefore, have minimal exposure to changes in interest rates. We have operated primarily in the United States and all sales to date have been made in U.S. dollars. Accordingly, we have not had any material exposure to foreign currency rate fluctuations. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We and three of our officers and directors (David V. Milligan, Daniel L. Kisner and James L. Knighton) have been named as defendants in three securities class action lawsuits filed in the United States District Court for the Southern District of New York. The first such suit is captioned Colbert Birnet, L.P v. Caliper Technologies Corp., et al.., No. 01-CV-5072, filed on June 7, 2001. The other two suits are captioned Kovel v. Caliper Technologies Corp., et al., No. 01-CV-5964 and Leach v. Caliper Technologies Corp., et al., 01-CV-6537, filed on June 29 and July 17, 2001, respectively. These cases have been transferred to a single federal district court judge together with over 800 similar cases involving more than 170 other companies that recently have conducted initial public offerings. Together, those cases are denominated In re Initial Public Offering Securities Litigation, 21 MC 92(SAS). We believe that the cases against Caliper will be consolidated and that a single consolidated complaint will be filed after the court appoints a lead plaintiff. The Kovel and Leach complaints allege claims against us and certain of our individual officers or directors under Sections 11 and 15 of the Securities Act of 1933. The Birnet and Kovel complaints allege claims against us and certain of our individual officers and directors under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 of the Securities Exchange Act. Each of the complaints also names as a defendant one or more of the underwriters of our December 1999 initial public offering of common stock. Each of the complaints alleges that one or more of these underwriters charged excessive, undisclosed commissions to investors and entered into improper agreements with investors relating to aftermarket transactions. The complaints seek rescission or rescissionary damages on the Section 11 claims and an unspecified amount of money damages on the Rule 10b-5 claims. Based on information currently available to us, we believe that the claims alleged against us and our officers and directors are without merit. We intend to defend these cases vigorously. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Our initial public offering of common stock was effected through a Registration Statement on Form S-1 (File No. 333-88827) that was declared effective by the SEC on December 14, 1999 and pursuant to which we sold all 5,175,000 shares of our common stock registered. The aggregate offering price of the 5,175,000 shares registered and sold was $82.8 million. Of this amount, $5.8 million was paid in underwriting discounts and commissions, and an additional $1.1 million of expenses was incurred through December 31, 1999. None of the expenses were paid, directly or indirectly, to directors, officers or persons owning 10 percent or more of our common stock, or to our affiliates. 21 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. ITEM 5. OTHER INFORMATION Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT ------ ----------------------- 3.1(1) Amended and Restated Certificate of Incorporation of Caliper. 3.2(2) Bylaws of Caliper. 4.1 Reference is made to Exhibits 3.1 and 3.2. 4.2(3) Specimen Stock Certificate. 10.33(4) LabChip Solutions Agreement, dated as of September 21, 2001, between Caliper and Amphora Discovery Corp. 10.34 Consulting Agreement, dated as of October 8, 2001, between Amphora discovery Corp. and Michael R. Knapp. 10.35 Founder Restricted Stock Purchase Agreement, dated as of October 8, 2001, between Amphora Discovery Corp. and Michael R. Knapp. 10.36 Consulting Agreement, dated as of October 14, 2001, between Amphora Discovery Corp. and James L. Knighton. 10.37 Founder Restricted Stock Purchase Agreement, dated as of October 14, 2001, between Amphora Discovery Corp. and James L. Knighton. 10.38(4) Technology Access Agreement Amendment, dated August 20, 2001, between Caliper and Eli Lilly and Company.
(1) Previously filed as Exhibit 3.3 to our Registration Statement on Form S-1, Registration No. 333-88827. (2) Previously filed as Exhibit 3.4 to our Registration Statement on Form S-1, Registration No. 333-88827. (3) Previously filed as the like-numbered Exhibit to our Registration Statement on Form S-1, Registration No. 333-88827. (4) Confidential treatment has been requested for a portion of this exhibit. (b) Reports on Form 8-K We did not file a Current Report on Form 8-K during the quarter ended September 30, 2001. 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CALIPER TECHNOLOGIES CORP. November 14, 2001 By: /s/ JAMES L. KNIGHTON -------------------------------- James L. Knighton Executive Vice President and Chief Financial Officer By: /s/ ANTHONY T. HENDRICKSON ------------------------------- Anthony T. Hendrickson Corporate Controller and Principal Accounting Officer 23 EXHIBIT INDEX 3.1(1) Amended and Restated Certificate of Incorporation of Caliper. 3.2(2) Bylaws of Caliper. 4.1 Reference is made to Exhibits 3.1 and 3.2. 4.2(3) Specimen Stock Certificate. 10.33(4) LabChip Solutions Agreement, dated as of September 21, 2001, between Caliper and Amphora Discovery Corp. 10.34 Consulting Agreement, dated as of October 8, 2001, between Amphora discovery Corp. and Michael R. Knapp. 10.35 Founder Restricted Stock Purchase Agreement, dated as of October 8, 2001, between Amphora Discovery Corp. and Michael R. Knapp. 10.36 Consulting Agreement, dated as of October 14, 2001, between Amphora Discovery Corp. and James L. Knighton. 10.37 Founder Restricted Stock Purchase Agreement, dated as of October 14, 2001, between Amphora Discovery Corp. and James L. Knighton. 10.38(4) Technology Access Agreement Amendment, dated August 20, 2001, between Caliper and Eli Lilly and Company.
(1) Previously filed as Exhibit 3.3 to our Registration Statement on Form S-1, Registration No. 333-88827. (2) Previously filed as Exhibit 3.4 to our Registration Statement on Form S-1, Registration No. 333-88827. (3) Previously filed as the like-numbered Exhibit to our Registration Statement on Form S-1, Registration No. 333-88827. (4) Confidential treatment has been requested for a portion of this exhibit. 24 EX-10.33 3 f76917ex10-33.txt EXHIBIT 10.33 EXHIBIT 10.33 CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. LABCHIP SOLUTIONS AGREEMENT This LABCHIP SOLUTIONS AGREEMENT ("Agreement"), dated as of September 21, 2001 (the "Effective Date"), is entered into by and between AMPHORA DISCOVERY CORP., a Delaware corporation ("Amphora"), and CALIPER TECHNOLOGIES CORP., a Delaware corporation ("Caliper"). Any capitalized terms used herein but not defined shall have the meaning ascribed to them in the Intellectual Property Agreement. RECITALS WHEREAS, Caliper has developed proprietary microfluidics and miniaturization technology applicable to pharmaceutical candidate Screening techniques; and WHEREAS, Amphora is in the business of screening agents and compounds using Caliper's technology and commercializing the data for use by third parties; and WHEREAS, Caliper and Amphora have entered into an Intellectual Property Agreement of even date herewith which contains certain exclusivity, licensing and other collaboration provisions; and WHEREAS, Caliper and Amphora desire to establish a commercial relationship for the purchase of Caliper's goods and services by Amphora. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained in this Agreement, the parties agree as follows: 1. DEFINITIONS 1.1. "AFFILIATE" shall mean, with respect to any Person, any other Person controlling, controlled by or under common control with, such Person. For purposes of this definition, the term "control" means the possession of the power to direct the management or policies of a Person through ownership of fifty percent (50%) or more of its voting securities entitled to [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -1- vote in the election of directors (or, in the case of a Person that is not a corporation, for the election of the corresponding managing authority). 1.2. "AMPHORA DEVELOPED PRODUCT" shall mean any product or component, including software, that is used in or reasonably useful for Screening and that is developed or made by or on behalf of Amphora pursuant to the license granted in Section 6.1.1, provided that the development, manufacture or use of such product by or on behalf of Amphora would infringe one or more claims of Patent Rights included in the Caliper Intellectual Property absent such license and not merely trade secret rights. 1.3. "AMPHORA IMPROVEMENTS" shall mean all inventions (whether or not patentable), discoveries, methods, compositions and other trade secrets and know-how (collectively, "Improvements") that are conceived or first reduced to practice by Caliper, solely or jointly with others, during the Term and in the course of performing services on behalf of Amphora hereunder, except as otherwise mutually agreed in writing, or otherwise using Amphora Materials, to the extent they are directed to [ * ] biological targets or compounds provided by Amphora, [ * ]. Amphora Improvements shall exclude all LabChip Improvements. 1.4. "CALENDAR QUARTER" shall mean a period of three consecutive calendar months commencing with any of January, April, July, or October. 1.5. "CALIPER INTELLECTUAL PROPERTY" shall have the meaning assigned in the Intellectual Property Agreement. 1.6. "CHIP" shall mean a microfluidic chip offered for sale or otherwise made available by Caliper to any Person, for use in a system which is used in, or useful for, Target Assay Protocol development or Screening, or otherwise generating data for a Multi-Target Screening Database (as defined in the Intellectual Property Agreement). 1.7. "CONFIDENTIAL INFORMATION" of a party shall mean all information provided by such party to the other party either in connection with the discussions and negotiations pertaining to this Agreement or in the course of performing this Agreement, whether in writing, orally or otherwise, provided that such information is either (i) the type of information that is customarily treated as confidential by the disclosing party, or (ii) specifically designated as confidential, in writing orally or otherwise, at the time of disclosure or reasonably promptly thereafter.. Subject to the foregoing, Confidential Information may include without [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -2- limitation, data; knowledge; practices; processes; ideas; research plans; chemical compounds; engineering designs and drawings; research data; manufacturing processes and techniques; scientific, manufacturing, marketing and business plans; and financial and personnel matters relating to the disclosing party or to its present or future products, sales, suppliers, customers, employees, investors or business. Notwithstanding the foregoing, information shall not be deemed Confidential Information for purposes of this Agreement if such information: (a) was already known to the receiving party or its Affiliates, other than under an obligation of confidentiality, at the time of disclosure by the disclosing party, as shown by the receiving party's files and records immediately prior to the time of disclosure; (b) was generally available or known to the public or otherwise part of the public domain at the time of its disclosure to the receiving party; (c) became generally available or known to the public or otherwise part of the public domain after its disclosure to the receiving party through no fault of the receiving party; (d) was disclosed to the receiving party or its Affiliates, other than under an obligation of confidentiality, by a third party who had no obligation not to disclose such information to others; or (e) was independently discovered or developed by the receiving party or its Affiliates without the use of Confidential Information belonging to the disclosing party. 1.8. "CONTRACT YEAR" shall mean a period of one year commencing on the Effective Date or on any anniversary of the Effective Date. 1.9. "COST OF GOODS" shall mean the cost of goods sold for the particular Product as calculated by Caliper in accordance with GAAP as GAAP is applied by Caliper in generating its publicly reported financial statements. As used herein, "GAAP" shall mean the then-current applicable Generally Accepted Accounting Principles in the United States consistently [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -3- applied as recognized or accepted by the United States Securities and Exchange Commission and the Financial Accounting Standards Board. 1.10. "DATAPOINT" shall mean [ * ] an Instrument introduces a sample into a Chip through a sipper in order to perform a particular LabChip Assay. As an example, on a standard Chip, a Datapoint is acquired [ * ] a sipper introduces such a sample into the Chip by dipping into a well. 1.11. "EFFECTIVE DATE" shall have the meaning stated in the introductory paragraph of this Agreement. 1.12. "EFFECTIVE FILING DATE" shall mean the earliest effective priority filing date to which the Patent Right is entitled in the applicable country, as determined on a claim by claim basis, in accordance with applicable law. By way of example, it is understood that the Effective Filing Date for each claim in a United States patent is the earlier of (i) the actual filing date of the United States patent application which issued into such patent, (ii) the priority date under 35 U.S.C. Section 119 for such claim, or (iii) the priority date under 35 U.S.C. Section 120 for such claim. 1.13. "FORECAST" shall have the meaning set forth in Section 2.4.1. 1.14. "FTE" shall mean one or more Caliper full-time equivalent person(s), whether employees, contractors or consultants, engaged in activities on Amphora's behalf under this Agreement for the equivalent of one full-time employee's time (assuming a 40-hour workweek). 1.15. "GENERAL ASSAY PROTOCOL" shall mean the protocol and set of biochemical conditions for performing a Screening assay on an Instrument System and Chip, which protocol and conditions are generally applicable to assays for multiple different biological targets. 1.16. "INSTRUMENT SYSTEM" shall mean the collection of hardware and software for use with Chips in a Screening system offered for sale or otherwise made available by Caliper to any Person, which system is used in, or useful for, Target Assay Protocol development or Screening, or otherwise generating data for a Multi-Target Screening Database (as defined in the Intellectual Property Agreement). [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -4- 1.17. "INTELLECTUAL PROPERTY AGREEMENT" shall mean that certain Intellectual Property Agreement by and between the parties hereto of even date herewith. 1.18. "IP" shall mean any and all rights in, to or arising out of any Patent Rights, trade secrets, know how or copyright rights. 1.19. "LABCHIP ASSAY" shall mean the complete protocol and set of biochemical conditions selected by a party for performing a Screening assay for a particular biological target on an Instrument System and Chip, consisting of the Target Assay Protocol plus the General Assay Protocol. LabChip(R) is a registered Caliper trademark but is printed without the registration mark in this Agreement for convenience. 1.20. "LABCHIP IMPROVEMENTS" shall mean all inventions (whether or not patentable), discoveries, methods, compositions and other trade secrets and know-how (collectively "Improvements") that are conceived or first reduced to practice by Amphora, solely or jointly with others, (i) during the Term, (ii) [ * ] and (iii) [ * ] directed to the design, development or manufacture of microfluidic chips or chip interfaces. For purposes of (iii), "directed to" means that the Improvement does [ * ] with regard to microfluidic chips. "Chip interface" means the [ * ] interface between a microfluidic chip and associated hardware. "LabChip Improvements" specifically include, but are not limited to, (a) chip designs and formats, (b) the chip cartridge design, (c) how the actuation forces (e.g., pressure, electrical) are applied to the chip, (d) physical or chemical methods for measuring temperature in channels, (e) Improvements directed to the Library Card System and (f) methods of controlling physical conditions for reagents on the chip (e.g. control of evaporation and temperature in on-chip reservoirs, or control of temperature or pressure in chip channels). For purposes of (e), "directed to" means that the Improvement does [ * ] with regard to Library Card Systems. "LabChip Improvements" specifically exclude, among other things, Target Assay Protocols. 1.21. "LIBRARY CARD SYSTEM" shall mean the system for low quantity, high-density storage of compounds retrievable with sipper chips, as further described in (i) Caliper's internal product lifecycle documentation as of the Effective Date, and (ii) pending patent applications filed by Caliper. 1.22. "LICENSABLE INTELLECTUAL PROPERTY" shall have the meaning assigned in the Intellectual Property Agreement. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -5- 1.23. "MATERIALS" shall have the meaning specified in Section 7.4. 1.24. "NEW LAB-ON-A-CHIP PRODUCTS" shall mean any product or component, including software, hardware, a microfluidic chip, a reagent, a LabChip Assay, that (i) is, or is used in, a chip-based system that utilizes Caliper's microfluidic chip technologies, (ii) is used in or reasonably useful for Screening and (iii) is not a Product as of the Effective Date. New Lab-on-a-Chip Products shall not include anything that constitutes a LabChip Improvement or Amphora Improvement. 1.25. "PATENT RIGHTS" shall have the meaning assigned in the Intellectual Property Agreement. 1.26. "PERSON" shall mean an individual, partnership, firm, corporation, limited liability company, joint venture, association, trust, any governmental agency or political subdivision thereof, or any other legal entity. 1.27. "PRODUCTION YEAR" shall mean a period of one year commencing on the Validation Date or on any anniversary thereof. 1.28. "PRODUCTS" shall mean all Instrument Systems, Chips, and other products and components, including hardware, Software and reagents, that (i) Caliper offers for sale or otherwise makes available during the Term to any Person and (ii) are used in, or useful for, LabChip Assay development or Screening, or otherwise generating data for a Multi-Target Screening Database (as defined in the Intellectual Property Agreement). For avoidance of doubt, Products shall include but not be limited to the products set forth in Exhibit B. 1.29. "PROJECTED AVAILABILITY DATE" shall have the meaning specified in Section 5.3.1. 1.30. "PURCHASE TERMS" shall mean the purchase terms and conditions set forth in Exhibit A. 1.31. "SCHEDULED DELIVERY DATE" shall mean the date on which Amphora has requested that a Product shall be shipped to Amphora, subject to the ordering lead times set forth in Section 2.4. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -6- 1.32. "SCREENING" shall have the meaning specified in the Intellectual Property Agreement. 1.33. "SCREENING DATABASE BUSINESS" shall have the meaning specified in the Intellectual Property Agreement. 1.34. "SPECIFICATIONS" shall mean the system specifications that accompany a Product or that are provided by Caliper in connection with the purchase of a Product. 1.35. "TARGET ASSAY PROTOCOL" shall mean the protocol and set of biochemical conditions for performing a Screening assay on an Instrument System and Chip, which protocol and conditions have been selected by a party for assaying one particular biological target. Target Assay Protocol shall not include any elements of such protocol or biochemical conditions that are included in the General Assay Protocol. 1.36. "TERM" shall have the meaning set forth in Section 12.1. 1.37. "TWELVE SIPPER SYSTEM" shall mean a system that contains (i) a Chip that has twelve sippers, (ii) the instrument and software on which such a Chip operates, and (iii) a standard LabChip Assay that can be run on the foregoing Chip, Instrument System and software. 1.38. "VALIDATION DATE" shall mean the date on which the initial quantities of Chips mutually agreed upon by the parties have been delivered to Amphora, and the initial shipment of Instrument Systems in a quantity to be mutually agreed have been installed by Caliper at Amphora's North Carolina offices (or as otherwise mutually agreed), and demonstrated by Caliper to function in accordance with the Specifications for such Instrument Systems and in performing Caliper's standard fluorogenic LabChip Assay. The parties expect such testing to be completed by [ * ]. 2. PRODUCTS 2.1. PRODUCT SALES. Throughout the Term, Caliper shall make available to Amphora all Products that Caliper makes commercially available to any customer. Caliper shall make all Products set forth on Exhibit B available to Amphora in accordance with the terms and conditions of this Agreement (including the Purchase Terms), without additional terms or restrictions. Caliper shall make available to Amphora other Products in accordance with Caliper's standard terms, provided that such Products may be subject to certain additional restrictions, [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -7- limitations, or terms, provided that such restrictions, terms and limitations shall be commercially reasonable and shall not materially adversely affect Amphora's rights under this Agreement or the Intellectual Property Agreement. In addition, during the course of this Agreement, Caliper may offer Amphora the opportunity to receive products other than Products. For example, Amphora may receive products being commercialized through Caliper's research collaboration with Agilent. Terms related to such transactions will be agreed upon separately or established for all customers by Caliper and Agilent, and are not intended to be included under the scope of this Agreement except as otherwise set forth herein. [ * ] ANY TERMS OR CONDITIONS OF ANY PURCHASE ORDER, ACKNOWLEDGMENT, OR OTHER DOCUMENT ISSUED BY EITHER PARTY FOR A PRODUCT SET FORT ON EXHIBIT B WHICH ARE IN ADDITION TO OR INCONSISTENT WITH THIS AGREEMENT OR THE INTELLECTUAL PROPERTY AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED, UNLESS SUCH ADDITIONAL TERMS AND CONDITIONS ARE SET FORTH IN A WRITING SIGNED BY BOTH PARTIES. 2.2. INITIAL SYSTEMS. 2.2.1. INITIAL PURCHASE ORDER. With respect to Products purchased under the first purchase order submitted by Amphora hereunder, Caliper shall resolve any performance issues within five (5) business days of written notice from Amphora. 2.2.2. PURCHASE COMMITMENT. Subject to the terms and conditions of this Agreement, including the Purchase Terms, and notwithstanding the lead times set forth in Section 2.4, Amphora shall place orders for and take delivery of, at least [ * ] Instrument Systems prior to [ * ] . Caliper shall ship the foregoing Instrument Systems pursuant to a schedule reasonably requested by Amphora. The Instrument Systems ordered concurrently with the execution of this Agreement shall be counted toward the foregoing purchase commitment. Prior to [ * ] Amphora shall purchase, and Caliper shall deliver to Amphora, at least an additional [ * ] Instrument Systems, subject to the terms and conditions of this Agreement, including the Purchase Terms. Notwithstanding anything to the contrary, Amphora shall have the right to suspend orders and delivery of further Instrument Systems under this Section 2.2 without breach in the event of ongoing, material warranty or installation issues with at least [ * ] of delivered or installed Instrument Systems purchased by Amphora, which issues are not resolved within [ * ] days of written notice by Amphora. Upon resolution of the [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -8- warranty or installation issue, the schedule for delivery of subsequent Instrument Systems will be reasonably adjusted in light of any delay relating to such issue, if such an adjustment is requested by Amphora. 2.3. [ * ] PRODUCTS. Notwithstanding Section 2.1, during the Exclusivity Period, [ * ] any product reasonably useful for Screening that is [ * ] and incorporates any Caliper Intellectual Property, provided that Amphora may [ * ] incorporate Caliper Intellectual Property. If [ * ] incorporating Caliper Intellectual Property that Caliper [ * ] during the Exclusivity Period, then, upon Amphora's request, Caliper [ * ] to Amphora upon commercially reasonable terms. 2.4. FORECASTS AND ORDERS. 2.4.1. FORECASTS. Amphora shall provide to Caliper, within thirty (30) days after the Effective Date and by the fifth day of each subsequent Calendar Quarter during the Term, Amphora's written, good-faith forecast of the quantity of Chips and Instrument Systems that Amphora anticipates it will order in each month during the following twelve-month period (each, a "Forecast"), provided that the number of Chips in the first six (6) months of each Forecast may not be increased by more than [ * ] the immediately preceding Forecast for the same period without the written consent of Caliper. If a new Chip or Instrument System is made available hereunder, an initial Forecast shall be provided by Amphora, which initial Forecast shall serve as the first Forecast for such Chip and/or Instrument System under this Section 2.4.1, with deliveries commencing at a date mutually agreed upon by the parties, which Caliper shall not require to be later than when Caliper first makes such Chip or Instrument System available to any third party Caliper shall supply to Amphora the quantities of Chips and Instrument Systems set forth in each Forecast to the extent set forth in Section 2.4.2. Notwithstanding anything set forth in this Section 2.4, if a Forecast for two (2) consecutive calendar months exceeds by more than [ * ] the actual orders placed by Amphora for such months, then Caliper shall be required to supply, in the immediately following calendar month, the lesser of (i) the percentage of Products required under Section 2.4.2 below, or (ii) the percentage of Products required under Section 2.4.2 minus the average percentage by which the previous two months' Forecast exceeded actual orders in such months. For example, if the Forecast for two consecutive months exceeded actual orders by [ * ] respectively, then Caliper shall only [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -9- be required to supply [ * ] of the Products that would otherwise be required for the following month under Section 2.4.2. 2.4.2. ORDERS. If Amphora provides to Caliper a purchase order for Chips at least three (3) months prior to the Scheduled Delivery Date for such Chips, then Caliper shall supply such Chips by such date, provided that Caliper shall not be required to timely supply that number of Chips which is in excess of [ * ] forecast in the immediately preceding Calendar Quarter, provided that Caliper shall use commercially reasonable efforts to fill orders for such quantities of Chips from available supplies. If Amphora provides to Caliper a purchase order for Instrument Systems at least six (6) months prior to the Scheduled Delivery Date for such Instrument Systems, then Caliper shall supply such Instrument Systems by such date, provided that Caliper shall not be required to timely deliver that number of Instrument Systems which is in excess of [ * ] of the Forecast provided to Caliper in the Calendar Quarter prior to the immediately preceding Calendar Quarter, provided that Caliper shall use commercially reasonable efforts to fill orders for such excess quantities of Instrument Systems from available supplies. Caliper shall notify Amphora within fifteen (15) calendar days from receipt of a purchase order of its ability to fill any amounts of such order in excess of the quantities that Caliper is obligated to supply. It is acknowledged and agreed that the parties may mutually agree from time to time to substitute new or improved Chips for existing Chips set forth in Amphora's Forecasts. The appropriate employees from each party shall meet on a monthly basis, or as otherwise mutually agreed, to discuss the Forecasts. 2.4.3. EARLY DELIVERY. For Chips delivered more than [ * ] calendar days in advance of the Scheduled Delivery Date, Amphora shall have the right to return such Chips to Caliper freight collect (with risk of loss remaining on Caliper) or accept such Chips with payment terms based upon the Scheduled Delivery Date and not the date of shipment by Caliper. 3. SERVICES 3.1. GENERAL. During the Term, Amphora shall have the right to request that Caliper perform the services set forth herein, and such services shall be provided by Caliper to Amphora, and contractors working on Amphora's behalf, subject to the terms set forth herein. Services to be provided by Caliper shall include, without limitation, (i) LabChip Assay development for targets selected by Amphora, (ii) installation, maintenance, and support for Product and [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -10- training and support for Amphora personnel developing LabChip Assays or using Products, (iii) custom development projects, and (iv) instrument platform extensions. 3.2. PROJECT PLAN. Subject to Section 3.4, each year during the Term, or as otherwise mutually agreed by the parties, Amphora and Caliper shall agree upon the services to be provided by Caliper to Amphora during such year or other time period (the "Project Plan"), subject to Caliper's determination of commercial and technical feasibility, and mutual agreement upon commercially reasonable terms for such services. Amphora and Caliper will jointly propose priorities and tasks to be accomplished by Caliper to support the Project Plan. Caliper will determine the necessary personnel resources and provide estimates (in writing, if requested) of the projected time needed to perform relevant tasks for, and the technical feasibility of various tasks included in, the Project Plan. The parties may amend the Project Plan at any time upon mutual agreement. 3.3. TYPES OF SERVICE. 3.3.1. LABCHIP ASSAY DEVELOPMENT. Throughout the Term, LabChip Assays for Amphora's targets will be developed collaboratively by the parties or solely by Amphora, as determined by Amphora. In general, where Caliper is developing a LabChip Assay for Amphora, Amphora will develop the appropriate biochemical and/or cellular reagents for the LabChip Assay and will provide the necessary (as determined by Amphora) quantities of reagents to Caliper. With respect to each Chip for use in a LabChip Assay desired by Amphora, Caliper shall supply such Chip to Amphora in accordance with the terms and conditions in this Agreement, including the ordering and forecasting terms set forth in Section 2.4. Caliper shall use commercially reasonable efforts to make such Chip available to Amphora as soon as possible after Amphora's request. 3.3.2. TRAINING. As Amphora requests at any time during the Term, one or more Caliper employees shall provide training for Amphora employees in development of LabChip Assays and use of Products, with the intended result of making Amphora independent in its use of the Products and in LabChip Assay development. The parties will attempt to schedule such training at mutually convenient times, provided that Caliper shall use commercially reasonable efforts to meet the timing requested by Amphora. Caliper shall also use commercially reasonable efforts to provide the training at the locations [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -11- requested by Amphora, including a number of visits to Amphora's facilities in North Carolina to be mutually agreed. 3.3.3. INSTALLATION. It is acknowledged and agreed that, if the parties have not previously agreed upon an installation date for an Instrument System or component thereof, then within thirty (30) calendar days after Amphora's request for installation, Caliper shall install such Instrument System at the location specified by Amphora. There shall be no charge by Caliper for such installation of each such Instrument System at one initial location, it being understood that the fees for such services are included in Amphora's purchase price for such Instrument System. The parties shall mutually agree upon the installation, testing and acceptance criteria and processes for Instrument Systems. 3.3.4. MAINTENANCE AND SUPPORT. Caliper shall provide software and equipment upgrades at Caliper's option, and technical telephone support of Products, pursuant to the Purchase Terms set forth in Exhibit A at no charge, it being understood that the fees for such upgrades and support are included in Amphora's purchase price for the applicable Product. Additional upgrades, maintenance and support services shall be available at an additional charge. 3.4. FIRST YEAR FTES. Subject to the terms and conditions of this Agreement, during the first Contract Year, Caliper shall provide to Amphora, and Amphora shall request, the assistance and support of [ * ] FTEs. Amphora shall have the right to use FTEs under this Section 3.4 for the performance of any services set forth herein, including the services set forth in this Article 3, subject to the terms of a Project Plan. Caliper and Amphora shall agree upon a Project Plan for such [ * ] FTEs. The parties may mutually agree in writing to adjust the foregoing FTE commitment. 3.5. QUALIFICATIONS. All services performed hereunder will be performed in a high quality, professional, and workmanlike manner consistent with industry practices and standards applicable to services of the type being provided. Caliper will use commercially reasonable efforts at all times to assign only individuals with the skills, experience, training and qualifications reasonably sufficient to perform services in accordance with this Agreement. Amphora shall have the right to require Caliper to replace, within sixty (60) days following Amphora's written request, any individual performing services who Amphora determines does not meet the criteria set forth above. If Caliper fails to comply with its obligations this Section 3.5, then at Amphora's request and at no cost or expense to Amphora, Caliper shall [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -12- promptly re-perform the relevant services. Caliper shall use commercially reasonable efforts in order to minimize materially disruptive changes in the Caliper personnel that provide Amphora support during a project. 3.6. AGREEMENTS WITH EMPLOYEES AND CONSULTANTS. Caliper shall have and maintain an agreement with each employee, consultant, and other individual performing services for Amphora under this Agreement such that, as between Caliper and such individual, all technology and IP invented or developed by such individual in the course of performing the services is assigned to and owned solely by Caliper. As between Caliper and Amphora, ownership shall be determined in accordance with the terms and conditions of this Agreement or a Related Agreement unless otherwise agreed in a writing signed by both parties. 3.7. FACILITY RULES. All individuals provided by Caliper to perform services, while on Amphora's premises, shall comply with all applicable rules and regulations of Amphora. No such individual shall stop, delay or interfere with Amphora's day-to-day operations without the prior written consent of Amphora. Caliper shall be solely responsible for compliance with the laws, rules, and regulations of any government entity with respect to all such individuals, including employment of labor, hours of labor, payment of wages, payment of taxes, unemployment, social security and other payroll taxes, and obtaining applicable contributions from such individuals when so required by law. 3.8. THIRD PARTY TECHNOLOGY. Caliper shall not use any IP or technology owned by a third party in connection with any services hereunder, or disclose any such third party IP or technology to Amphora, unless Caliper obtains Amphora's prior written consent and provides Amphora with all information reasonably requested by Amphora regarding such IP and technology, in each case, if Caliper's use of such third party technology in connection with the provision of services to Amphora, or Amphora's exploitation of the results of Caliper's services, would violate any agreement with or proprietary right of the third party. 3.9. DEVELOPMENT RECORDS. Caliper shall make commercially reasonable efforts to maintain reasonable records relating to services provided under this Agreement. 3.10. REPORTING. Caliper shall deliver written reports to Amphora within the first ten (10) days of each Calendar Quarter describing the actual time applied by Caliper's employees and designees to Amphora support tasks in the preceding Calendar Quarter. Such reports shall [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -13- include a reasonable description of the project, the name of each individual performing the work, and the time spent by such individual to perform the project on a daily basis. 4. PRICING AND PAYMENTS 4.1. INSTRUMENT SYSTEM PRICING. Instrument Systems identified on Exhibit C (and materially similar Instrument Systems with minor modifications or improvements) (collectively, "Current Instrument Systems") and all Instrument Systems other than Current Instrument Systems ("Future Instrument Systems") purchased during the first [ * ] Contract Years shall be offered to Amphora at the discounts set forth in Exhibit C. The discount rate for Class I Products shall be based upon the total aggregate number of Class I Products purchased in the then current Contract Year. The discount rate for Class II Products shall be based upon the total aggregate number of Class II Products purchased in the then current Contract Year. Future Instrument System purchases in each Contract Year shall be aggregated with Amphora's total purchases of Current Instrument Systems during such Contract Year within each Instrument System class set forth on Exhibit C for the purpose of determining Amphora's discount rate for such Future Instrument Systems. For purposes of Exhibit C, "Class I" Instrument Systems are Current Instrument Systems and Future Instrument Systems for Screening that have environmental controls and plate handling capability, and "Class II" Instrument Systems are Current Instrument Systems and Future Instrument Systems that do not include environmental controls and plate handling capability. 4.2. CHIP AND DATAPOINT PRICING. Until the end of [ * ] the pricing for each Chip and Datapoint derived from a Chip shall be as set forth in this Section 4.2. 4.2.1. CHIPS. Subject to the terms and conditions of this Agreement, Caliper will sell Chips to Amphora at [ * ] the then-current list price for the volumes purchased by Amphora (the current list price for a 4-sipper Chip is $250), or [ * ] for the applicable Chip. 4.2.2. DATAPOINTS. 4.2.2.1.[ * ] YEAR. Subject to the terms and conditions of this Agreement, Amphora shall pay to Caliper [ * ] Datapoints generated prior to the end of the [ * ]. 4.2.2.2.[ * ] YEAR. Subject to the terms and conditions of this Agreement, Amphora shall pay to Caliper [ * ] Datapoints produced during the [ * ]. If Amphora produces [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -14- [ * ] Datapoints during [ * ] then Amphora shall pay Caliper [ * ] produced by Amphora during [ * ] up to a maximum total price of [ * ]. 4.2.2.3.VALID DATAPOINTS. If Amphora submits a service or warranty claim for a defective Chip or Instrument System, then the Datapoints generated by such Chip or Instrument System during the period in which Amphora claims that such Chip or Instrument System was defective shall not count towards the total number of Datapoints generated by Amphora for purposes of invoicing Amphora for Datapoint fees under Section 4.2.2.2 above, provided that (i) Amphora shall have in place sufficient quality control procedures to, and shall in the event of a warranty claim, cease use of, the allegedly defective Chip or Instrument System within one (1) day of Amphora becoming aware of the defect; (ii) Amphora shall report such defective Product and, in the event of a defective Chip, return the Chip to Caliper, within five (5) calendar days of Amphora becoming aware of the defect, and (iii) the claim was subsequently verified or accepted by Caliper, such review by Caliper to occur within thirty (30) days after the claim is submitted by Amphora. The parties shall cooperate to establish further procedures to administer this Section 4.2.2.3. 4.2.2.4.FAILURE OF CHIP SUPPLY. Notwithstanding Sections 4.2.2.1 and 4.2.2.2, if, in any Calendar Quarter during [ * ], Caliper fails to supply to Amphora by the Scheduled Delivery Date at least [ * ] of the Chips that Caliper is required to supply pursuant to Section 2.4, then a percentage of the quarterly Datapoint fees that were paid by Amphora at the beginning of such Calendar Quarter shall be reimbursed by Caliper to Amphora as a credit or refund in accordance with Section 4.2.2.6 below. The percentage of such Datapoint fees to be reimbursed shall equal [ * ] during such Calendar Quarter. 4.2.2.5.CHIP WARRANTY ISSUES. Notwithstanding Sections 4.2.2.1 and 4.2.2.2, if, in any Calendar Quarter during [ * ] of Chips delivered in any Calendar Quarter are returned by Amphora due to a warranty claim, and Caliper's warranty or service organization agrees to provide any accommodation to Amphora in view of such warranty claim (applying the same standards Caliper applies to warranty claims from its other customers), then a percentage of the quarterly Datapoint fees that were paid by Amphora at the beginning of such Calendar Quarter shall be reimbursed by Caliper to Amphora as a credit or refund in accordance with [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -15- Section 4.2.2.6 below. The percentage of Datapoint fees to be reimbursed shall equal [ * ] that were not the subject of an acknowledged warranty claim as set forth above. 4.2.2.6.REIMBURSEMENT PROCEDURE. Each reimbursement accruing in a Calendar Quarter pursuant to this Section 4.2.2 shall be provided by Caliper to Amphora as a credit against Datapoint fees due at the beginning of the immediately following Calendar Quarter; provided that if the applicable failure or delay occurs during the last Calendar Quarter for which a quarterly payment is made under Sections 4.2.2.1 and 4.2.2.2, then reimbursement shall be provided as refund paid by Caliper to Amphora within thirty (30) days after the end of such Calendar Quarter. Any reimbursements or reductions of quarterly Datapoint fees pursuant to this Section 4.2.2 shall be cumulative, provided that reimbursements by Caliper shall not exceed the total amount of Datapoint fees due to Caliper in any Calendar Quarter. 4.3. SERVICES PRICING. From the Effective Date until [ * ] services provided hereunder shall be invoiced at a rate of [ * ] (excluding travel expenses for which Amphora is responsible as set forth below). Thereafter, such services shall be provided by Caliper at rate that is no greater than Caliper's then-current list price for comparable services. Amphora will reimburse Caliper for Caliper's out of pocket costs of airfare, hotel accommodations, and meals reasonably necessary in connection with the applicable service pursuant to a reimbursement policy mutually agreed by the parties. 4.4. [ * ] From the beginning of [ * ] until the end of the Term, when Amphora enters into negotiations with Caliper [ * ] of Datapoints and/or Products [ * ]. 4.5. PAYMENT TERMS. 4.5.1. GENERAL. All amounts set forth in this Agreement are in U.S. dollars. Caliper shall invoice Amphora on the date of shipping of a Product. Amphora shall pay all invoices within thirty (30) calendar days of receipt. Except as expressly set forth herein, Caliper shall bear all direct and other costs associated with its personnel performing services. Except as set forth in the Purchase Terms, each party shall be solely responsible for and shall pay all taxes based on amounts it receives in the connection with this Agreement and will fully indemnify the other party for any failure to pay such taxes. If [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -16- a party does not pay an amount payable to the other party under this Agreement on or prior to the due date, late fees shall accrue and become immediately due and payable on the outstanding unpaid balance at a rate of the lower of one and one-half percent (1.5%) per month or the highest amount permitted by law. Caliper shall have the right, at its option, to discontinue the provision of services hereunder upon ten (10) days notice (with a right to cure) if Amphora has not paid an undisputed invoice within ninety (90) days of receipt of proper invoice. 4.5.2. SERVICES. Caliper shall invoice Amphora quarterly in advance for services provided pursuant to a Project Plan. During the first Contract Year, such invoices shall be for a minimum of [ * ] provided that Caliper has made such FTEs reasonably available to Amphora. The fees for each quarter in subsequent years shall be based on the number of hours of support scheduled to be provided for such quarter pursuant to a Project Plan. Requests at any time for Caliper support for a program in excess of the amounts set forth in the Project Plan or otherwise previously agreed upon shall be subject to mutual agreement. The parties shall reconcile any discrepancy between funding and actual Caliper time provided for each quarter within thirty (30) days after the final report for the preceding Calendar Quarter has been delivered to Amphora. Amphora shall not be responsible for any FTE costs or other fees for service except to the extent that the cost and fees have been approved in advance in a further writing signed by Amphora, (not including Amphora's obligation with respect to [ * ] for the first Contract Year as set forth in Section 3.4 above) and Caliper shall not be obligated to perform any activities unless such activities have been approved by Amphora in writing. 4.5.3. VARIABLE DATAPOINT FEES. The Datapoint fees set forth in Sections 4.2.2.1 and 4.2.2.2 shall be payable on a quarterly basis in four equal installments, subject to applicable reductions as set forth in Section 4.2.2 after the beginning of each of the four Calendar Quarters consecutively following the beginning of [ * ] as applicable. In the event that Amphora generates Datapoints in excess of [ * ] the parties shall agree on the process for reporting and payment for such Datapoints, including the timing of such payments. 4.5.4. RECORDS AND INSPECTION. In addition to the development records required under Section 3.9, each party shall keep complete, true and accurate books of account and records sufficient to determine and establish the applicable party's compliance with its obligations under Sections 2.1, 3.6, 4.2.1, 4.2.2 and 4.4. Such books and records shall [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -17- be kept reasonably accessible for three (3) years following the end of the Calendar Quarter to which they pertain. All such records maintained by a party shall be made available for inspection by the other party throughout such three (3) year period by an independent third party auditor selected by mutual agreement of the parties. Such inspections may be made at any time during a party's normal business hours upon five (5) days advance notice. The requesting party shall bear the costs and expenses of inspections conducted under this Section 4.5.4, unless a material non-compliance with this Agreement is identified, whereupon all costs of the audit paid to third parties will be paid by the audited party. In the event that an audit demonstrates that payment from one party to another party is required hereunder, the paying party shall make such payment within thirty (30) days after completion of the audit, together with interest on such overpayment at the rate specified in Section 4.5.1. 5. COLLABORATION AND DEVELOPMENT. 5.1. CUSTOM DEVELOPMENT. If Amphora would like to have Caliper develop new products or modify existing Caliper products to customize them to Amphora's specifications, then Caliper shall negotiate with Amphora in good faith regarding an agreement under which Caliper is obligated to provide such custom development services. Custom development projects may be conducted pursuant to the following general terms (the specific terms of which shall be negotiated later by the parties): (a) Amphora may fund all Caliper FTEs at a rate to be mutually agreed. (b) Amphora controls the project's objectives and budget, subject to Caliper's discretion as to technical feasibility and potential infringement of third party IP. The parties mutually agree on how to achieve the objectives, reasonable timelines and milestones, roles and responsibilities, etc. The parties may also agree on incentives to spur the development process. (c) Caliper may have rights to commercialize resulting products. However, Amphora may have a period of exclusivity or other competitive advantage with respect to use of such products in a Screening Database Business. (d) Depending on the scale of the project and other factors, the parties may negotiate some form of royalty. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -18- 5.2 ACCELERATED DEVELOPMENT. Amphora and Caliper may mutually agree to accelerate a product in the Caliper product development lifecycle, and the following general terms may apply: (i) Caliper may control the project's objectives, (ii) Amphora may fund less than 100% of Caliper's FTEs, and (iii) an exclusivity period may or may not apply. The parties have agreed that, subject to agreement on terms, Amphora may accelerate the development of [ * ] under this Section 5.2 (not as a custom project under Section 5.1) once such systems have entered the Laboratory Phase pursuant to terms mutually agreed by the parties. If Amphora would like to have Caliper accelerate development of any system or product, then Caliper shall negotiate with Amphora in good faith regarding an agreement under which Caliper is obligated to provide such services. 5.3 [ * ] AND [ * ] SYSTEMS. 5.3.1 AVAILABILITY. Caliper currently expects that the [ * ] System will enter the laboratory prototype phase of its product lifecycle (the "Laboratory Phase") by [ * ] and currently expects that the [ * ] System will enter the Laboratory Phase by [ * ] (each, the "Projected Availability Date"). Caliper shall keep Amphora fully informed regarding Caliper's progress toward each of the Projected Availability Dates and shall notify Amphora promptly in writing in the event of any potential delay in either Projected Availability Date, describing in such notice Caliper's best estimate of the revised Projected Availability Date. 5.3.2 INCENTIVE AND LATE FEES. If the [ * ] System enters the Laboratory Phase by [ * ] then Amphora shall pay to Caliper a one-time incentive fee of [ * ]. If the [ * ] System enters the Laboratory Phase on or after [ * ] then Caliper shall pay to Amphora a one-time late fee of [ * ]. If the [ * ] System enters the Laboratory Phase by [ * ] then Amphora shall pay to Caliper a one-time incentive fee of [ * ]. If the [ * ] System enters the Laboratory Phase on or after [ * ] then Caliper shall pay to Amphora a one-time late fee of [ * ]. Any incentive payments paid by Amphora under this Section shall not be counted towards Amphora's Minimums as set forth in Section 3.4 of the Intellectual Property Agreement. 6. LICENSE FOR AMPHORA DEVELOPED PRODUCTS 6.1. LICENSE GRANT. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -19- 6.1.1. LICENSE FOR SCREENING DATABASE BUSINESS. Subject to the terms and conditions of this Agreement, Caliper hereby grants to Amphora a worldwide, non-exclusive, [ * ] right and license, under the Licensable Intellectual Property having an Effective Filing Date or generated prior to the [ * ] of the Effective Date to [ * ] excluding all microfluidic chips and chip cartridges and any products which are substantially the same as a Product, for use for any purpose and any application (including use to practice any method or process) related or reasonably ancillary to (i) its Screening Database Business, or (ii) providing contract Screening services. Notwithstanding the foregoing, Amphora agrees that it will not exercise the license in this Section 6.1 to use a product for Screening to provide contract Screening services without obtaining Caliper's prior written consent to such development, which consent shall not be unreasonably withheld. The foregoing license grant is subject to all the terms and conditions set forth in Sections 2.3 through 2.7 of the Intellectual Property Agreement regarding license rights to Screening Products, as well as the terms and conditions set forth below in this Article 6. The rights set forth in this Article 6 may not be sublicensed, shared or transferred in any manner without the prior written consent of Caliper, except as otherwise provided in Section 6.8 below and in Section 14.5 . If Caliper releases a Product after Amphora has already begun development of an Amphora Developed Product that is substantially the same as such Product, then the license set forth in this Section 6.1 shall apply to such Amphora Developed Product. 6.1.2. LICENSE TO SELL TARGET ASSAY PROTOCOLS. Subject to the terms and conditions of this Agreement, Caliper hereby grants to Amphora a worldwide, non-exclusive, [ * ] right and license, under the Licensable Intellectual Property having an Effective Filing Date or generated prior to the [ * ] of the Effective Date to sell and disclose Target Assay Protocols for use with Instrument Systems and Chips offered for sale by Caliper or any Caliper Partner. 6.2. MODIFICATIONS OF PRODUCTS. The license set forth in Section 6.1 above includes the right to modify in any way any hardware or software included in a Product purchased by Amphora from Caliper. However, if any such modification is made, all warranty and other service commitments made by Caliper in connection with the sale of the particular Product unit that has been modified will be voided, and Caliper will not be obligated to support or provide upgrades for such modified Product unit unless the parties have otherwise agreed in writing. Upon request by Amphora, Caliper will provide [ * ] provided with a Product [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -20- purchased by Amphora. If Amphora desires any further assistance from Caliper to modify [ * ] such assistance shall be the subject of negotiations of a collaborative development project as discussed in Section 6.4 below. In addition, Amphora may reproduce the software provided with a Product for development purposes in accordance with this Article 6, provided that such reproduced software shall not be installed on any Product unit for which software was not previously purchased from Caliper. 6.3. DEVELOPMENT OF MICROFLUIDIC CHIPS AND CHIP CARTRIDGES. Caliper reserves all rights to design and otherwise develop the microfluidic chip or chip cartridge for use with any Amphora Developed Product. In response to any request from Amphora for Caliper to perform such activities, Caliper agrees to offer Amphora terms for providing such services that are no less favorable to Amphora than those terms Caliper generally offers to third parties for similar development. In all cases Caliper shall have the right to require that the specifications for each microfluidic chip and chip cartridge be consistent with then current Caliper design standards and chip manufacturing processes. 6.4. DEVELOPMENT OF OTHER COMPONENTS. With regard to all components other than the microfluidic chip and chip cartridge to be used with any Amphora Developed Product, Caliper shall have a [ * ] as described below to provide any development services which Amphora may elect to have provided on its behalf by a third party. Before discussing any such project with any third party, Amphora shall notify Caliper in writing of the project. Amphora shall provide Caliper with relevant, non-confidential information and negotiate in good faith with Caliper for [ * ] regarding Caliper providing such development services. After such period, Amphora shall be free to discuss such project with any third party and [ * ]. 6.5. MANUFACTURE AND SUPPLY OF MICROFLUIDIC CHIPS AND CHIP CARTRIDGES. Caliper reserves all rights to manufacture and supply each microfluidic chip and each chip cartridge for use with any Amphora Developed Product, on terms to be negotiated or established in the future. 6.6. MANUFACTURE AND SUPPLY OF INSTRUMENTS AND OTHER COMPONENTS. With regard to instruments and other hardware for use with any Amphora Developed Product (not including prototypes or other development-stage systems), Caliper shall have a [ * ] as described below to manufacture and supply such hardware to Amphora. Caliper shall have [ * ] with respect to manufacture and supply of software or reagents for use with any [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -21- Amphora Developed Product. Before discussing any manufacturing and supply project with any third party, Amphora shall notify Caliper in writing of the project. Amphora shall provide Caliper with relevant, non-confidential information and negotiate in good faith with Caliper for [ * ] regarding Caliper providing such manufacturing services. If Amphora and Caliper do not agree during such time period, Amphora shall [ * ] Amphora may require that information disclosed to Caliper under this Section 6.6 shall be treated as Amphora Confidential Information and shall not be subject to the license rights granted to Caliper under Article 7. 6.7. NO SALES OF AMPHORA DEVELOPED PRODUCTS. Amphora shall not sell or otherwise provide to any third party any Amphora Developed Product, except to subcontractors for use on Amphora's behalf pursuant to Section 6.8 below or as otherwise set forth in Section 6.1.2. 6.8. SUBLICENSING AND THIRD PARTIES. Amphora shall have the right to have Amphora Developed Products developed, made or used on its behalf pursuant to the license granted in Section 6.1.1 above by any third party (a "Subcontractor"), provided Amphora has complied with all the other provisions of this Article 6 in doing so, and subject to subsections 6.8.1 and 6.8.2. 6.8.1. INFRINGING SUBCONTRACTORS. Amphora may not engage any third party in any such activities if such third party is otherwise engaged in activities that infringe Caliper Intellectual Property. So that Caliper may monitor this provision, Amphora shall disclose the name of each such third party to Caliper prior to engaging the third party and permit Caliper a reasonable time, not to exceed fifteen (15) days, to investigate and object to such third party on these grounds. 6.8.2. SUBCONTRACTOR ACKNOWLEDGEMENT. Amphora shall require any third party engaged as a Subcontractor to enter into a written agreement with Amphora expressly agreeing to all of the same restrictions and obligations applicable to Amphora under Section 2.3 of the Intellectual Property Agreement and Sections 6.3, 6.5 and 6.7 above. Amphora shall make Caliper a third party beneficiary of such provisions and shall provide Caliper with a copy of such provisions promptly following their execution. Caliper shall have the right to enforce such contractual provisions if Amphora fails to take reasonable actions to address any breach of such provisions within a reasonable time after notice of the breach. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -22- 7. INTELLECTUAL PROPERTY AND RIGHTS TO NEW DEVELOPMENTS 7.1. GENERAL RULES ON OWNERSHIP OF INVENTIONS. Except as otherwise provided in this Article 7, (i) each party shall solely own all inventions, works of authorship, other technology, and IP, whether patentable or not, created or invented solely by its employees and/or consultants and (ii) Caliper and Amphora shall jointly own inventions, works of authorship, other technology, and IP created or invented jointly by employees and/or consultants of both parties, and neither party shall have any obligation to obtain the consent of the other party in order to exploit or license such inventions, works of authorship, technology, or IP, or any duty to account to the other party for profits obtained therefrom. Each party shall execute all documents and take all actions reasonably necessary to perfect ownership rights of the other party as provided in this Article 7 and to enable the filing of patent applications for assigned inventions. Inventorship of all inventions covered by this Agreement shall be determined under U.S. patent laws. 7.2. LABCHIP IMPROVEMENTS. 7.2.1. PATENTED LABCHIP IMPROVEMENTS. Amphora hereby assigns to Caliper all of Amphora's right, title and interest in and to all Patent Rights to the extent claiming any LabChip Improvements. Caliper shall have the sole right to determine whether to file for any Patent Rights claiming a LabChip Improvement disclosed to Caliper pursuant to Section 7.2.2. below, and to control the prosecution and defense of any Patent Rights with respect thereto. If requested by Caliper, Amphora shall cooperate in patenting activities for such LabChip Improvements, at Caliper's expense, and shall execute any documents necessary to effect such assignment. In exchange for this assignment, Caliper hereby grants to Amphora a royalty-free, non-exclusive, non-transferable (except as provided in Section 14.5), perpetual license under such Patent Rights to use such LabChip Improvements, and have them used by others on Amphora's behalf, in Amphora's Screening Database Business, provided that no rights in any other Caliper Intellectual Property (e.g. background patents) are granted pursuant to this Section 7.2.1. 7.2.2. UNPATENTED LABCHIP IMPROVEMENTS. For any LabChip Improvement that is not claimed in any patent application or patent, Amphora may elect either to disclose information regarding such LabChip Improvement to Caliper or to retain such information as confidential to Amphora. Caliper may use or disclose freely, without [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -23- restriction under Article 8 below, any such information that Amphora discloses to Caliper. Such use or disclosure may include, without limitation, inclusion of such information in any patent application filed by Caliper. 7.2.3. SOFTWARE PATENTS. The parties recognize that Amphora may make software inventions [ * ] Amphora shall grant Caliper a royalty-free non-exclusive license under any Amphora Patent Rights claiming such inventions for use for all applications outside the Screening Database Business. 7.3. AMPHORA IMPROVEMENTS 7.3.1. PATENTED AMPHORA IMPROVEMENTS. Caliper hereby assigns to Amphora all of Caliper's right, title and interest in and to all Patent Rights to the extent claiming any Amphora Improvements. Amphora shall have the sole right to determine whether to file for any Patent Rights claiming an Amphora Improvement disclosed to Amphora pursuant to Section 7.3.2. below, and to control the prosecution and defense of any Patent Rights with respect thereto. If requested by Amphora, Caliper shall cooperate in patenting activities for such Amphora Improvements, at Amphora's expense, and shall execute any documents necessary to effect such assignment. In exchange for this assignment, Amphora hereby grants to Caliper a royalty-free, non-exclusive, non-transferable (except as provided in Section 14.5), perpetual license under any such Patent Rights applicable to Target Assay Protocols to use Target Assay Protocols included in Amphora Improvements, and have them used by others on Caliper's behalf, generally in Caliper's business, but not to sell or otherwise provide such Target Assay Protocols or materially the same Target Assay Protocol to third parties; provided that no rights in any other Amphora IP (e.g. background patents) are granted pursuant to this Section 7.3.1. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -24- 7.3.2. UNPATENTED AMPHORA IMPROVEMENTS. For any Amphora Improvement that is not claimed in any patent application or patent, Caliper may elect either to disclose information regarding such Amphora Improvement to Amphora or to retain such information as confidential to Caliper. Amphora may use or disclose freely, without restriction under Article 8 below, any such information that Amphora discloses to Caliper. Such use or disclosure may include, without limitation, inclusion of such information in any patent application filed by Amphora. 7.4. USE OF AMPHORA MATERIALS. Amphora and/or its Affiliates may provide to Caliper pursuant to this Agreement certain compounds, substrates, reagents and other materials (collectively, the "Materials"), which are and shall remain the sole property of Amphora. Any information provided in connection with the Materials shall be treated as Confidential Information of Amphora, except as otherwise provided in this Agreement. The provision of Materials to Caliper under this Agreement does not grant Caliper any license or other right to such Materials, except the limited right to use the Materials for the sole purpose of satisfying its obligations to Amphora under this Agreement and for no other purpose, except as otherwise provided in this Agreement. Caliper understands that some Materials may have unpredictable or unknown biological and/or chemical properties and that they should be used with caution. Upon request by Amphora, Caliper shall promptly return to Amphora or destroy any remaining Materials. 7.5. NEW LAB-ON-A-CHIP PRODUCTS. The parties recognize that they have mutual interests in the development of New Lab-on-a-Chip Products; Caliper primarily for purposes of commercializing such products and Amphora primarily for purposes of using them in connection with its Screening Database Business. Caliper is granting rights under Caliper Intellectual Property in Article 6 in order to enable Amphora, not just Caliper, to pursue these types of developments. The parties also wish to encourage a spirit of open communication and collaboration between them in the early investigation of such product opportunities, while preserving the freedom in later development stages to either collaborate or pursue independent efforts. The parties expect that it may be in their mutual interests to pursue such opportunities collaboratively. However, they may review and discuss such matters on a case by case basis in the future. Accordingly, they agree as follows: 7.5.1. DISCLOSURE AND DEVELOPMENT OF NEW LAB-ON-A-CHIP PRODUCTS. If either party is interested in pursuing development of a New Lab-on-a-Chip Product, it may do so [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -25- independently or seek a collaborative development agreement with the other party on the terms contemplated in Sections 5.1 and 5.2 or other terms. Either party may choose, in its sole discretion, whether to disclose or not disclose to the other party any or all information concerning an internal project to develop a New Lab-on-a-Chip, and if so, to what extent. Any such information disclosed to the other party, whether in writing, orally or otherwise in the course of the parties' work together ("Disclosed New Lab-on-a-Chip Product Information"), shall be subject to the license granted to the other party in this Section 7.5. However, even if a party elects not to disclose such information with regard to a particular project, such party acknowledges that any Patent Rights arising out of the undisclosed project will nevertheless be included in the following license grant. The parties expressly agree to this provision in order to encourage collaborative efforts and to avoid having either party be "blocked" from developing and exploiting New Lab-on-a-Chip Products by Patent Rights generated by the other party. 7.5.2. GRANT TO CALIPER. Amphora hereby grants to Caliper a worldwide, [ * ] non-exclusive, non-transferable (except as provided in this Section and Section 14.5), right and license, under (i) all Patent Rights owned or licensable by Amphora during the Term having an Effective Filing Date between the Effective Date and the expiration or termination of this Agreement, other than Patent Rights acquired by Amphora from third parties, and (ii) all Amphora trade secret and other know-how rights pertaining to Disclosed New Lab-on-a-Chip Product Information, in each case to [ * ]. However, New Lab-on-a-Chip Products developed pursuant to this license shall be subject to the same terms applicable to Screening Products under Article 3 of the Intellectual Property Agreement (Exclusivity for Screening Database Business) except that such terms shall apply for twenty (20) years from the Effective Date, irrespective of expiration or termination of the Intellectual Property Agreement. Caliper may sublicense such rights, subject to the foregoing exclusivity, only to third parties engaged with Caliper in the development, manufacture or sale of New Lab-on-a-Chip Products, and only if (i) such third parties expressly agree to the preceding terms, and (ii) Caliper manufactures and supplies the chip for use in such New Lab-on-a-Chip Product. 7.5.3. GRANT TO AMPHORA. Caliper hereby grants to Amphora a worldwide, [ * ] non-exclusive, non-transferable (except as provided in this Section and Section 14.5), right and license, under (i) all Patent Rights owned or licensable by Caliper during the Term having an Effective Filing Date between the Effective Date and the expiration or termination of this Agreement, other than Patent Rights acquired by Caliper from third [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -26- parties, and (ii) all Caliper trade secret and other know-how rights pertaining to Disclosed New Lab-on-a-Chip Product Information, in each case (a) to [ * ] on the same terms and conditions applicable to Amphora Developed Products under Article 6 of this Agreement and, in addition, (b) with respect to General Assay Protocols and LabChip Assays, and any portion thereof, that have been developed and made pursuant to (a) above and designed to run on instruments and microfluidic chips sold commercially by Caliper or a Caliper Partner, to [ * ] that include Target Assay Protocols developed by Amphora (and tangible embodiments thereof other than microfluidic chips and instruments) to Amphora's Screening Database Business customers. Amphora may sublicense such rights only to third parties engaged with Amphora in the above activities, and only if such third parties expressly agree to the preceding terms. 8. CONFIDENTIALITY; PUBLICITY 8.1. CONFIDENTIAL INFORMATION. During the Term, and for a period of three (3) years following the expiration or termination of this Agreement, each party shall maintain in confidence any and all Confidential Information received from the other party. Each party further agrees that it shall not use for any purpose not authorized under this Agreement or the Intellectual Property Agreement or disclose to any third party the Confidential Information of the other party, except that either party may disclose Confidential Information of the other party on a need-to-know basis for such purposes to its directors, officers, employees, consultants, agents and Affiliates if it shall have first required such recipients to undertake an obligation of confidentiality and non-use materially as protective as this Section 8.1. For avoidance of doubt and except as otherwise set forth herein, Caliper is authorized to use and disclose the Confidential Information of Amphora under this Section 8.1 solely as necessary to supply Products to, and perform services for, Amphora under this Agreement. Notwithstanding the provisions of this Section, each party may disclose the other party's Confidential Information to the extent such disclosure is reasonably necessary to comply with applicable governmental laws, regulations, or orders; provided that if a party is required to make any such disclosure of the other party's Confidential Information, it will, to the extent it may legally do so, give reasonable advance notice to such other party of such disclosure and will use its reasonable efforts to secure confidential treatment of such information prior to its disclosure (whether through protective orders or otherwise). Notwithstanding this Section 8.1, the obligations of confidentiality and non-use set forth above shall not apply to the extent that the provisions of Articles 6 or 7 grant the receiving party rights to disclose or use Confidential Information. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -27- 8.2. PUBLICITY. Neither party shall originate any news release or other public announcement (except with regard to SEC or other financial reporting obligations) relating to this Agreement without providing the other party with the opportunity to review and provide comments regarding the contents of such announcement. With regard to SEC or other financial reporting obligations relating to this Agreement, each party shall make commercially reasonable efforts to consult with the other party prior to any public announcements. 8.3. CONFIDENTIAL TERMS. The terms of this Agreement shall be Confidential Information. Notwithstanding the foregoing, either party may disclose this Agreement, under reasonable obligations of confidentiality and non-use on a need-to-know basis, to investors and their representatives in a private or public financing transaction, to potential acquirers or targets and their representatives in a corporate change of control transaction, otherwise in connection with a merger, acquisition of stock or assets, proposed merger or acquisition, or the like, as advisable or required by law (including but not limited to the filing of this Agreement as an exhibit to a document filed with the Securities and Exchange Commission), order or regulation of a governmental agency, to legal counsel of such parties, or in connection with the enforcement of this Agreement or rights under this Agreement. The disclosing party shall provide written notice to the other party of any such disclosure advisable or required by law, order or regulation of a governmental agency, reasonably in advance if practical. If either party intends to file this Agreement with the Securities and Exchange Commission, such party agrees to provide the other party with a copy of the proposed filing for review and comment at least ten days in advance of the filing date. The disclosing party shall not unreasonably withhold its acceptance of any comments made by the other party within such period. 9. REPRESENTATIONS AND WARRANTIES 9.1. GENERAL WARRANTIES. Each Party hereby represents and warrants to the other that the statements made in this Section 9.1 are true and correct as of the Effective Date: 9.1.1. AUTHORIZATION; ENFORCEABILITY. The execution and delivery of this Agreement by such Party and the performance of its obligations hereunder and its consummation of the transactions contemplated herein have been duly and validly authorized by all necessary corporate action on the part of such party in accordance with applicable law. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -28- This Agreement, when executed and delivered by such party, will constitute a valid and legally binding obligation of such party, enforceable in accordance with its terms. 9.1.2. NO DEFAULT. The execution and delivery of this Agreement does not, and the consummation of the transactions and performance of the obligations by such party under this Agreement, including the disclosure of any information to the other party, will not: (i) result in any violation of any statute, law, rule, regulation, judgment, order, decree, or ordinance, in each case as in effect as of the Effective Date, applicable to such party, its Affiliates, or an IP owned or licensed to such party or its Affiliates; (ii) conflict with any provision of the bylaws or articles of incorporation of such party or its Affiliates; (iii) result in any breach or default (with or without notice or lapse of time, or both) under any agreement, contract, or other instrument to which such party or its Affiliate is a party; or (iv) result in the creation of any liens, pledges, charges, claims, security interests or other encumbrances of any sort ("Liens") on any IP owned or licensed to such party or its Affiliates. 9.1.3. CONSENTS. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency, commission, regulatory authority or other governmental authority or instrumentality, domestic or foreign (a "Governmental Entity") or any other person or entity, is required by or with respect to such party or its Affiliates in connection with the execution or delivery of this Agreement or the consummation of the transactions or performance of the obligations by Caliper or its Affiliates under this Agreement. 9.2. ADDITIONAL WARRANTIES BY CALIPER. Caliper hereby represents and warrants to Amphora that the statements made in this Section 9.2 are true and correct as of the Effective Date: 9.2.1. NO NOTICE OF INFRINGEMENT. Caliper has not received notice from any person or entity claiming that the manufacture, use, sale, offer for sale, importation, or other exploitation of any Product infringes or misappropriates the IP of any Person (nor has Caliper determined that there is any reasonable basis therefor), nor has Caliper received notice from any Person claiming that the exploitation of any Product constitutes unfair competition or trade practices under the laws of any jurisdiction. Without limiting the foregoing, no claims with respect to any Product have been communicated to Caliper challenging the ownership or validity of Caliper's rights in or to the Products. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -29- 9.2.2. LITIGATION. There is no action, suit, proceeding, claim or governmental investigation pending or, to Caliper's knowledge, threatened, against Caliper related to any Product. 10. DISCLAIMERS; LIMITATION OF LIABILITY 10.1. CALIPER DISCLAIMER. EXCEPT AS SET FORTH IN THIS AGREEMENT, INCLUDING THE PURCHASE TERMS OR THE INTELLECTUAL PROPERTY AGREEMENT, THE PROVISIONS OF THIS AGREEMENT SHALL NOT BE CONSTRUED AS A PRODUCT WARRANTY BY CALIPER OF ANY KIND, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY CALIPER TECHNOLOGY, PRODUCT OR OTHER PRODUCTS DEVELOPED OR PROVIDED PURSUANT TO THIS AGREEMENT. Caliper shall not be liable to Amphora for any personal injury or property damage resulting from use of any Product in a manner that is not recommended by Caliper and is not reasonably contemplated or intended, except in the case of gross negligence by Caliper, its Affiliate or the designee of Caliper or its Affiliate. 10.2. AMPHORA DISCLAIMER. AMPHORA MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND IN CONNECTION WITH THIS AGREEMENT, AND AMPHORA HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Caliper acknowledges that some of the targets and/or Materials to be provided to Caliper pursuant to this Agreement are for research purposes. Caliper acknowledges that such targets and/or Materials can carry risks and must be handled appropriately. Amphora shall not be liable to Caliper for any personal injury or property damage resulting from the use or handling of such targets and/or Materials, except in the case of gross negligence by Amphora or its Affiliate. 10.3. NO RELIANCE. Neither party has relied upon any representations or warranties of the other party in entering into this Agreement except as set forth in this Agreement or the Intellectual Property Agreement. 10.4. LIMITATION OF LIABILITY. EXCEPT WITH RESPECT TO A BREACH OF SECTION [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -30- 8, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION, LOST PROFITS), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY THEREOF. Each party acknowledges that the foregoing limitations are an essential element of the Agreement between the parties and that in the absence of such limitations the pricing and other terms set forth in this Agreement would be substantially different. 11. INDEMNIFICATION 11.1. INDEMNIFICATION. Each party (the "Indemnitor") agrees to indemnify, defend and hold harmless each of the other party and its Affiliates, and the directors, officers, employees, agents, and contractors, of each of such party and its Affiliates, and the successors and assigns of any of the foregoing (the "Indemnitees"), from and against any and all liabilities, damages, settlements, claims, actions, suits, proceedings, penalties, fines, costs and expenses (including, without limitation, reasonable attorneys' fees and other expenses of litigation) (any of the foregoing, a "Claim") incurred by any Indemnitee, based upon a claim of a third party arising from or occurring as a result of (i) a breach by the Indemnitor of any representation, warranty, or covenant under this Agreement; (ii) where Caliper is the Indemnitor, the infringement of a third party's IP as a result of the purchase or use of any Product or deliverable provided by Caliper or its Affiliate or designee; or (iii) the negligence or willful misconduct of the Indemnitor, its Affiliates, or its designees that perform services hereunder. 11.2. PROCEDURE. If a party intends to claim indemnification under this Section 11, it shall promptly notify the Indemnitor in writing of any claim, action, or proceeding (each an "Action") in respect of which an Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof; provided that the Indemnitee shall have the right to participate, at its own expense, with counsel of its own choosing in the defense and/or settlement of such Action. The indemnification under this Article 11 shall not apply to amounts paid with respect to settlement of any Claim if such settlement is effected without the consent of the Indemnitee, which consent will not be unreasonably withheld or delayed. The failure to deliver written notice to the Indemnitor within a reasonable period of time after the commencement of any Action, if prejudicial to the Indemnitor's ability to defend such Action, shall relieve the Indemnitor of any liability to the Indemnitee under this Article 11 with respect to such Action, but the omission to so [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -31- deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability to any Indemnitee otherwise than under this Article 11. Without limiting the foregoing, the Indemnitee shall keep the Indemnitor reasonably informed of the progress of any Action for which the Indemnitee intends to claim indemnification under this Article 11. The Indemnitor shall not be responsible for any costs or expenses incurred by an Indemnitee without the Indemnitor's prior written consent, which consent will not be unreasonably withheld or delayed. 12. TERM AND TERMINATION 12.1. TERM. The term of this Agreement ("Term") shall begin on the Effective Date and end at the end of the Exclusivity Period as defined in the Intellectual Property Agreement, unless extended or earlier terminated pursuant to this Article 12 or modified by mutual written agreement of the parties pursuant to Section 14.5. 12.2. TERMINATION BY EITHER PARTY. This Agreement may be terminated prior to the expiration of the Term only in accordance with one of the following paragraphs: 12.2.1. Either party may terminate this Agreement upon written notice to the other party in the event of a material breach of this Agreement by such other party; provided, however, that prior to any such termination, the terminating party shall have provided the other party with written notice of the circumstances constituting such breach and such other party shall have failed to cure such breach within a period of ninety (90) days thereafter. The foregoing shall not limit a party's right to seek any other remedies available to it, such as monetary damages and specific performance, without termination of this Agreement. 12.2.2. Either party may terminate this Agreement immediately upon written notice to the other party if the other party is dissolved. 12.3. SURVIVING OBLIGATIONS. No expiration or termination of this Agreement shall relieve either party of any obligation accruing prior to such expiration or termination. With respect to Article 6 and Section 7.5, the rights granted therein shall survive, subject to the related terms and conditions in such sections, only with respect to Amphora Developed Products and New Lab-on-a-Chip Products for which development was initiated during the Term. The provisions of Sections 3.9, 3.10, 4.5.1, 4.5.4, 8.1, 8.3, 10.4, and Articles 11, 12, 13 and [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -32- 14, and the reconciliation and reimbursement obligations in Section 4.5.2 together with any provisions required for their interpretation or enforcement, shall survive the expiration or termination of this Agreement. 13. DISPUTE RESOLUTION 13.1. ESCALATION. If the parties are unable to resolve any dispute between them arising out of or in connection with this Agreement, either party may, by written notice to the other, have such dispute referred for attempted resolution by good faith negotiations between an executive of Caliper and an executive of Amphora (each at the vice president level or higher). Such negotiations shall commence within thirty (30) days after such notice is received by the other party, but neither party shall be obligated to negotiate for more than ninety (90) days. If the parties should resolve such dispute or claim, a memorandum setting forth their agreement will be prepared and signed by both parties if requested by either Party. 13.2. ARBITRATION. Caliper and Amphora agree that any dispute arising out of or related to this Agreement, or the validity, enforceability, construction, performance or breach hereof, which is not settled by the parties in accordance with Section 13.1 shall be settled by binding arbitration under the then current rules of the American Arbitration Association. The venue of such arbitration shall be Santa Clara county, CA. The arbitration shall be conducted by a panel of three (3) arbitrators appointed in accordance with such rules. Unless the decision involves the termination of or otherwise prejudices any rights of Amphora arising out of this Agreement, the decision and/or award rendered by the arbitrator(s) shall be written, final and non-appealable and may be entered in any court of competent jurisdiction. The parties agree that, any provision of applicable law notwithstanding, they will not request, and the arbitrator shall have no authority to award, punitive or exemplary damages against any party. The costs of any arbitration proceedings, including administrative fees and fees of the arbitrator(s), shall be shared equally by the parties. Each party shall bear the cost of its own attorneys' and expert fees. 14 MISCELLANEOUS 14.1 ASSIGNMENT IN BANKRUPTCY. Notwithstanding anything to the contrary, each party (the "First Party") hereby consents to the assumption of this Agreement by the other party (the "Second Party") in any case under chapter 11 of the United States Bankruptcy Code to the extent that such consent is required under 11 U.S.C. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -33- Section 365(c)(1), but only if the Second Party is otherwise entitled to assume this Agreement under the requirements of the Bankruptcy Code. The sole purpose of the foregoing consent is to overcome any restriction imposed by 11 U.S.C. Section 365(c)(1) on the Second Party's assumption of this Agreement in a chapter 11 case concerning the Second Party. It is not intended to limit any other rights of the First Party under this Agreement or any provision of the Bankruptcy Code, including, without limitation, 11 U.S.C. Section 365(c)(1). The foregoing consent applies only to the assumption of the Agreement by the Second Party and does not apply to the Second Party's assignment of this Agreement or any rights hereunder to a third party, which shall remain subject to all of the terms and conditions of Section 14.5 of this Agreement. 14.2 ARTICLE AND SECTION HEADINGS, LANGUAGE AND CONSTRUCTION. The article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references in this Agreement to "Articles," "Sections" and "Exhibits" refer to the articles, sections and exhibits of this Agreement. The words "hereof," "herein" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any subdivision contained in this Agreement. The words "include" and "including" when used herein are not exclusive and mean "include, without limitation" and "including, without limitation," respectively. This Agreement has been negotiated by the parties and their respective counsel. Accordingly, this Agreement will be interpreted fairly in accordance with its terms and without any strict construction in favor of or against either Party. 14.3 GOVERNING LAW. THIS AGREEMENT, AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES OF CALIFORNIA OR ANY OTHER JURISDICTION. 14.4 INDEPENDENT CONTRACTORS. The relationship of Caliper and Amphora established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any relationship other than independent contractors. Neither Party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -34- 14.5 ASSIGNMENT. Neither Party may assign or otherwise transfer this Agreement or any of its rights or licenses hereunder without the prior written consent of the other Party hereto, except to a party that succeeds to all or substantially all of such Party's business or assets, whether by sale of stock or assets, merger, operation of law or otherwise; provided that such assignee or transferee agrees in writing to be bound by the terms and conditions of this Agreement and to continue for one year after the date of the transfer to actively pursue the business of, in the case of Amphora, using Screening Products for performing Screening Database Business and, in the case of Caliper, development, manufacture and sale of microfluidic products. Any other attempt by a Party to assign or otherwise transfer this Agreement shall be null and void without the prior written consent of the other Party. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. 14.6 MODIFICATION. No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by both parties. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by both parties. 14.7 SEVERABILITY. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 14.8 FORCE MAJEURE. Neither Party shall be liable to the other for, and non-performance shall be excused as a result of, delays or failures in performance resulting from causes beyond its reasonable control, including earthquakes, fires, riots or civil disturbances, acts of war, acts of God, power disruptions, inability to obtain products, materials or supplies, acts of government or its agencies, including laws, regulations, or judicial action, strikes or other labor disputes or disturbances, or communication, utility or transportation failures. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -35- 14.9 NOTICES. Any notice or other communication required by this Agreement shall be made in writing and given by (i) prepaid, first class, certified mail, return receipt requested, (ii) facsimile, or (iii) overnight courier; and shall be deemed to have been served on the date received by the addressee at such address as may from time to time be designated to the other Party in writing: If to: Caliper Caliper Technologies Corp. 605 Fairchild Drive Mountain View CA 94043-2234 Attn: Senior Director, Legal Affairs and Corporate Development Telefax: 650.623.0500 If to: Amphora Amphora Discovery Corp. 209 Sierra Drive Chapel Hill, NC 27514 Attn: Martin Haslanger Telefax: 919.933.6506 14.10 ENTIRE AGREEMENT. The parties acknowledge that this Agreement, the Related Agreements, and the Exhibits of each such agreement, set forth the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersede all prior and contemporaneous discussions, agreements and writings in respect hereto, including without limitation the term sheet. 14.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -36- IN WITNESS WHEREOF, the parties have executed the Agreement as of the date first set forth above. CALIPER TECHNOLOGIES CORP. AMPHORA DISCOVERY CORP. By: /s/ Daniel Kisner By: /s/ Martin Haslanger ------------------------------- -------------------------------- Name: Daniel Kisner Name: Martin Haslanger ----------------------------- ------------------------------ Title: Pres./CEO Title: President & CEO ---------------------------- ----------------------------- [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -37- EXHIBIT A PURCHASE TERMS 1. SOLUTIONS AGREEMENT. These Purchase Terms are hereby incorporated into and shall be considered a part of this Agreement. All purchases by Amphora of Products that are listed in Exhibit B of this Agreement ("Existing Products") shall be subject only to the terms and conditions of this Agreement, including these Purchase Terms. 2. DELIVERY. Unless otherwise specified in writing by Amphora, shipments shall be F.O.B. place of shipment. Caliper shall ship all Existing Products prepaid, properly insured. Title of Existing Products shipped and risk of loss or damage shall pass from Caliper to Amphora upon Caliper's delivery of Existing Products to the common carrier specified by Amphora or reasonably chosen by Caliper, if not specified by Amphora. Caliper shall preserve, package, handle, and pack the Existing Products so as to protect the Existing Products from loss or damage, in conformance with good commercial practices, Amphora specifications (if any), government regulations, and other applicable standards. Caliper shall be responsible for any loss or damage due to its failure to properly preserve, package, or handle the Existing Products. Each Existing Product delivered to Amphora shall include a packing list which contains at least an Amphora Purchase Order Number, Caliper's part number and description, quantity of Existing Products shipped, and date of shipment. The purchase price for Existing Products shall be as set forth in this Agreement. All applicable taxes, freight, packaging, insurance, handling and other charges will be added to and separately itemized in the invoice. 3. COMPLIANCE WITH LAW. Amphora will use the Existing Product(s) purchased hereunder in compliance with all applicable laws and regulations. 4. RETURN MATERIAL AUTHORIZATION. Caliper warrants the Warranty Products (as defined below) to be free from defects in material and workmanship for the duration of the Warranty Period (as defined below). If any Warranty Product is found to have such a defect, Amphora or its designee shall have the right to return the Warranty Product to Caliper during the following timeframes: for Warranty Products other than Instrument Systems, at any time during the Warranty Period, and for Warranty Products that are Instrument Systems, prior to the earlier of [ * ]. Upon return of a Warranty Product by Amphora pursuant to the foregoing sentence, Caliper shall provide a replacement [ * ]. Subject to the following, any Warranty Product returned to Caliper shall be accompanied by a Return Material Authorization (RMA). Unless further verification is reasonably required by Caliper, Caliper shall issue an RMA within [ * ] of Amphora's request for return of a noncomplying Warranty Product. If further verification is so required or if Caliper would like to attempt to repair the Warranty Product, Caliper may come to Amphora's facility for such purposes provided that, if desired by Amphora, an RMA shall be supplied by Caliper to Amphora within [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED [ * ] of Amphora's request for return of the noncomplying Warranty Product if Caliper has failed to repair the Warranty Product or establish that the Warranty Product is not defective, by such time. [ * ] Amphora shall additionally have the right, at its sole option and Caliper's sole cost, to require Caliper to repair the nonconforming Warranty Product pursuant to the terms of Section 6 below. [ * ] 5. CHIP AND INSTRUMENT WARRANTIES. Caliper warrants that, (i) with respect to Existing Products that are Instrument Systems, for a period until the earlier of one year from the completion of installation testing or fifteen (15) months from the date of delivery in good condition to Amphora in accordance with this Agreement, and (ii) with respect to Existing Products that are Chips, for a period until three (3) months from the date of delivery in good condition of a Chip to Amphora in accordance with this Agreement (each, a "Warranty Period"), the Existing Products that are Instrument System(s) or Chips (each, a "Warranty Product") purchased by Amphora hereunder will be free from defects in material and workmanship [ * ]. If the Warranty Product fails to comply with the warranty in this Section 5 during the Warranty Period and the Warranty Product has not been returned pursuant to Section 4, Caliper will (i) for Warranty Products that are Instrument Systems, repair or replace them, at Caliper's option and at Caliper's expense, within the time frames set forth in Section 6 below, and (ii) for Warranty Products that are Chips, Caliper will replace them upon completion of its review of the warranty claim as contemplated in Section 4.2.2.3 of this Agreement, but in no event later than thirty (30) days after the claim has been submitted by Amphora, provided that Caliper shall make commercially reasonable efforts to replace defective Chips prior to the end of such thirty (30) day period. If the Warranty Product has been returned pursuant to Section 4, the remedy shall be as set forth therein. If the Warranty Product becomes damaged, or the performance of the Warranty Product otherwise deteriorates due to solvents and/or reagents other than those supplied or expressly recommended by Caliper or otherwise materially similar to those supplied or expressly recommended by Caliper, Caliper will repair or replace the Warranty Product, at Amphora's option and at Amphora's expense. No such repairs or replacement will extend the original Warranty Period. This Warranty does not apply to any Warranty Product or part which has been (a) the subject of an accident, misuse, or neglect after shipment to Amphora in accordance with this Agreement, (b) modified or improperly repaired by a party other than Caliper or its authorized representative, or (c) used in a manner which is not in accordance with the instructions contained in the Warranty Product User's Manual; provided that such use is not a reasonably contemplated use of the Warranty Product. This warranty does not cover Amphora-installed accessories or Amphora-installed consumable parts for the Warranty Product that are listed in the Warranty Product User's manual; provided that such accessories and consumables are not themselves Warranty Products. All claims under Caliper's warranty must be made within [ * ]. Except for Caliper's right to obtain a credit or refund as provided under Section 4, Caliper's obligations under this warranty are limited to repair or replacement as necessary to correct those defects in material and/or workmanship [ * ] of which Caliper is notified within [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED thirty (30) days after the expiration of the Warranty Period. All repairs and replacements performed by Caliper under this warranty will be performed by Caliper at Caliper's sole expense [ * ]. Except pursuant to written terms signed by an officer of Caliper, no agent, employee, or representative of Caliper has any authority to bind Caliper to any affirmation, representation, or warranty concerning the Warranty Product that is not contained in Caliper's printed product literature or the Specifications. Any such affirmation, representation, or warranty made by any agent, employee, or representative of Caliper not pursuant to written terms signed by an officer of Caliper will not be binding on Caliper. Caliper makes no warranty whatsoever with regard to products or parts furnished by third parties, unless such product or part is provided by Caliper as part of a Warranty Product. This warranty is limited to the original location of installation and is not transferable, except that (a) this warranty shall apply in Mountain View and North Carolina to the initial Instrument Systems purchase that will be first installed in Mountain View and then transferred to North Carolina [ * ] which training and certification Caliper shall make reasonably available to Amphora pursuant to the terms of Article 3 of this Agreement. This warranty is the sole and exclusive warranty as to the Instrument System and is in lieu of any other express or implied warranties, including, without limitation, any implied warranty of merchantability or fitness for a particular purpose and is in lieu of any other obligation on the part of Caliper. THIS PARAGRAPH STATES AMPHORA'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF WARRANTY. IN NO EVENT SHALL CALIPER BE LIABLE FOR ANY USE, OR INABILITY TO USE, BY AMPHORA OF THE PRODUCT(S) EXCEPT THAT CALIPER SHALL BE OBLIGATED TO PERFORM ITS RESPONSIBILITIES SET FORTH IN THESE PURCHASE TERMS; NOR SHALL CALIPER BE LIABLE FOR ANY PUNITIVE, CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES ARISING FROM OR IN CONNECTION WITH ITS ACTIVITIES UNDER THESE PURCHASE TERMS, INCLUDING WITHOUT LIMITATION ANY PUNITIVE, CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES FOR LATE DELIVERY OF THE PRODUCT(S), EXCEPT AS OTHERWISE SET FORTH IN THE SOLUTIONS AGREEMENT. 6. INSTRUMENT REPAIR AND MAINTENANCE. Caliper shall respond to Amphora's initial call for service for an Instrument System with a telephone call to Amphora by a qualified Caliper technical service representative within [ * ]. Caliper shall have a qualified Caliper technical service representative at Amphora's site, if Amphora is experiencing a warranty or maintenance issue with an Instrument System, within [ * ] of Amphora's request for warranty or maintenance services on an Instrument System, subject to any force majeure event as set forth in this Agreement. Upon arrival, the service representative shall work diligently toward resolution of the warranty or maintenance issue. Caliper shall make commercially reasonable efforts to repair an Instrument System within [ * ] of Amphora's request for warranty or maintenance services, it being acknowledged that what constitutes reasonable efforts will take into account any force majeure event or extraordinary damage. If not corrected within such time period, Caliper will [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED continue to use commercially reasonable efforts to correct the problem as soon as reasonably practicable. If the Existing Product is under warranty, Caliper shall install a replacement product within [ * ] after Amphora's request for warranty services if the defect has not been remedied by such time. The foregoing warranty repairs shall be at no charge to Amphora during the Warranty Period. Caliper shall provide to Amphora any additional support services for the applicable Existing Products that Caliper provides generally to its customers upon the terms generally provided to its customers. The Warranty Period for any Warranty Product replaced under this warranty shall begin upon the installation or delivery in good condition of the replaced Warranty Product, as provided in Section 5. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT B CALIPER SCREENING PRODUCTS HTS 250 PRODUCT CATALOG: PRODUCT SYSTEM CALIPER 250 CORE SYSTEM MOBILITY SHIFT AND FLUOROGENIC -2-CCD Detection SCREENING SYSTEM -Blue and Red excitation lasers -Caliper 250 Core System -16V+1P Power and Pressure -Option 1*: Environmental Control and Controller Multi-Plate Handling -Option 2*: Addition of UV Excitation and -Computer System Detection -X-Y-Z robot system w/controller -Fluorogenic Analysis Module -Next Gen Instrument Control and -Off-Chip Mobility Shift Analysis Module Data Acquisition Software -Includes 3 Training Credits OPTION 2*: ADDITION OF UV EXCITATION AND DETECTION MOBILITY SHIFT SCREENING SYSTEM -355nM Excitation and Detection -Caliper 250 Core System -Option 1*: Environmental Control and Multi-Plate Handling -Off-Chip Mobility Shift Analysis Module ANALYSIS SOFTWARE -4-Sipper Fluorogenic Chip MOBILITY SHIFT AND FLUOROGENIC -Fluorogenic Price/Datapoint DEVELOPMENT SYSTEM -Caliper 250 Core System -Option 2*: Addition of UV Excitation and Detection -Fluorogenic Analysis Module -Off-Chip Mobility Shift Analysis Module MOBILITY SHIFT DEVELOPMENT SYSTEM -Caliper 250 Core System -Off-Chip Mobility Shift Analysis Module [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED EXHIBIT C INSTRUMENT PRICING TABLE A # OF INSTRUMENT SYSTEMS* DISCOUNT [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] BY WAY OF EXAMPLE, THE FIRST CLASS I INSTRUMENT SYSTEM PURCHASED BY AMPHORA DURING THE FIRST CONTRACT YEAR [ * ]. THE [ * ] CLASS I INSTRUMENT SYSTEM PURCHASED BY AMPHORA IN THE SAME CONTRACT YEAR SHALL BE PRICED AT [ * ] THE DISCOUNT RATE FOR CLASS II INSTRUMENT SYSTEMS SHALL BE DETERMINED IN THE SAME MANNER AS THE FOREGOING. THE RATE SCHEDULE SHALL RESET TO [ * ] DISCOUNT FOR EACH CLASS AT THE BEGINNING OF THE SECOND CONTRACT YEAR. TABLE B CURRENT INSTRUMENT SYSTEMS CLASS I -- CALIPER 250 MOBILITY SHIFT AND FLUOROGENIC SCREENING SYSTEM -- CALIPER 250 MOBILITY SHIFT SCREENING SYSTEM CLASS II -- CALIPER 250 MOBILITY SHIFT AND FLUOROGENIC DEVELOPMENT SYSTEM -- CALIPER 250 MOBILITY SHIFT DEVELOPMENT SYSTEM * THE AGGREGATE NUMBER OF CURRENT AND FUTURE INSTRUMENT SYSTEMS ORDERED WITHIN EACH CLASS OF INSTRUMENT SYSTEMS AND WITHIN THE FIRST OR SECOND CONTRACT YEAR ** "CONTRACT PRICE" MEANS, FOR CURRENT INSTRUMENT SYSTEMS, THE [ * ], AND FOR FUTURE INSTRUMENT SYSTEMS, CALIPER'S LIST PRICE AS OF THE DATE OF THE PURCHASE ORDER SUBMITTED BY AMPHORA, [ * ]. CURRENT AND FUTURE INSTRUMENT SYSTEMS FOR WHICH AMPHORA HAS PAID THE CONTRACT PRICE [ * ]. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED EX-10.34 4 f76917ex10-34.txt EXHIBIT 10.34 Exhibit 10.34 AMPHORA DISCOVERY CORP. KNAPP CONSULTING AGREEMENT This Consulting Agreement ("Agreement") is made and entered into as of the 8th day of October, 2001 by and between Amphora Discovery Corp., a Delaware corporation (the "Company"), and Michael R. Knapp ("Consultant"). The Company desires to retain Consultant as an independent contractor to perform consulting services for the Company and Consultant is willing to perform such services, on terms set forth more fully below. In consideration of the mutual promises contained herein, the parties agree as follows: 1. SERVICES AND COMPENSATION (a) Consultant agrees to perform for the Company the services described in Exhibit A ("Services"). (b) The Company agrees to pay Consultant the compensation set forth in Exhibit A for the performance of the Services. 2. CONFIDENTIALITY (a) "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, customers, customer lists, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed by the Company either directly or indirectly in writing, orally or by drawings or inspection of parts or equipment. (b) Consultant will not, during or subsequent to the term of this Agreement, use the Company's Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or disclose the Company's Confidential Information to any third party, and it is understood that said Confidential Information shall remain the sole property of the Company. Consultant further agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information. Confidential Information does not include information which: (i) is known to Consultant at the time of disclosure to Consultant by the Company as evidenced by written records of Consultant; (ii) has become publicly known and made generally available through no wrongful act of Consultant; or (iii) has been rightfully received by Consultant from a third party who is authorized to make such disclosure. Without the Company's prior written approval, Consultant will not directly or indirectly disclose to anyone the terms of this Agreement. (c) Consultant agrees that Consultant will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former or current employer or other person or entity with which Consultant has an agreement or duty to keep in confidence information acquired by Consultant in confidence, if any, and that Consultant will not bring onto the premises of the Company any unpublished document or proprietary information belonging to such employer, person or entity unless consented to in writing by such employer, person or entity. Consultant will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys fees and costs of suit, arising out of or in connection with any violation or claimed violation of a third party's rights resulting in whole or in part from the Company's use of the work product of Consultant under this Agreement. (d) Consultant recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. Consultant agrees that Consultant owes the Company and such third parties, during the term of this Agreement and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services for the Company consistent with the Company's agreement with such third party. (e) Upon the termination of this Agreement, or upon Company's earlier request, Consultant will deliver to the Company all of the Company's property or Confidential Information in tangible form that Consultant may have in Consultant's possession or control. 3. OWNERSHIP (a) Consultant agrees that all copyrightable material, notes, records, drawings, designs, inventions, improvements, developments, discoveries and trade secrets (collectively, "Inventions") conceived, made or discovered by Consultant, solely or in collaboration with others, during the period of this Agreement that Consultant may undertake, investigate or experiment with, or which Consultant may become associated with in work, investigation or experimentation, in performing the Services hereunder, are the sole property of the Company. In addition, any Inventions which constitute copyrightable subject matter shall be considered "works made for hire" as that term is defined in the United States Copyright Act. Consultant further agrees to assign (or cause to be assigned) and does hereby assign fully to the Company all such Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. (b) Consultant agrees to assist Company, or its designee, at the Company's expense, in every proper way to secure the Company's rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Consultant further agrees that Consultant's obligation to execute or cause to -2- be executed, when it is in Consultant's power to do so, any such instrument or papers shall continue after the termination of this Agreement. (c) Consultant agrees that if in the course of performing the Services, Consultant incorporates into any Invention developed hereunder any invention, improvement, development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item as part of or in connection with such Invention. (d) Consultant agrees that if the Company is unable because of Consultant's unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure Consultant's signature to apply for or to pursue any application for any United States or foreign patents or mask work or copyright registrations covering the Inventions assigned to the Company above, then Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant's agent and attorney in fact, to act for and in Consultant's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright and mask work registrations thereon with the same legal force and effect as if executed by Consultant. 4. REPORTS Consultant agrees that it will from time to time during the term of this Agreement or any extension thereof keep the Company advised as to Consultant's progress in performing the Services hereunder and that Consultant will, as requested by the Company, prepare written reports with respect thereto. It is understood that the time required in the preparation of such written reports shall be considered time devoted to the performance of Consultant's Services. 5. CONFLICTING OBLIGATIONS (a) Consultant certifies that Consultant has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, or that would preclude Consultant from complying with the provisions hereof, and further certifies that Consultant will not enter into any such conflicting Agreement during the term of this Agreement. Consultant further certifies that Consultant's act of entering into this Agreement, purchasing stock of the Company, and serving as a consultant to the Company do not violate any outstanding agreement, obligation, or employment arrangement of Consultant's. Consultant further agrees that he will not perform any services for the Company which would conflict with any agreement or obligation of Consultant or which would cause or result in any other person or entity having any ownership interest in any intellectual property of the Company's. (b) In view of Consultant's access to the Company's trade secrets and proprietary know-how, Consultant further agrees that Consultant will not, without Company's prior written consent, design identical or substantially similar designs as those developed under this Agreement for any -3- third party during the term of this Agreement and for a period of twelve (12) months after the termination of this Agreement. 6. TERM AND TERMINATION (a) This Agreement will commence on the date first written above and will continue until final completion of the Services or termination as provided below. (b) Either party may terminate this Agreement upon giving thirty (30) days prior written notice thereof to the other party. Any such notice shall be addressed to the address shown below or such other address as either party may notify the other of and shall be deemed given upon delivery if personally delivered, or forty-eight (48) hours after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested. The Company may terminate this Agreement immediately and without prior notice if Consultant refuses to or is unable to perform the Services or is in breach of any material provision of this Agreement. (c) Upon such termination all rights and duties of the parties toward each other shall cease except: (i) that the Company shall be obliged to pay, within thirty (30) days of the effective date of termination, all amounts owing to Consultant for unpaid Services and related expenses, if any, in accordance with the provisions of Section 1 (Services and Compensation) hereof; and (ii) Sections 2 (Confidentiality), 3 (Ownership) and 8 (Independent Contractors) shall survive termination of this Agreement. 7. ASSIGNMENT Neither this Agreement nor any right hereunder may be assigned by any party hereto, except that the Company may assign this Agreement in connection with (1) a merger or consolidation of the Company, (2) a sale or assignment of substantially all its assets, or (3) any other transaction which results in another entity or person owning substantially all of the assets of the Company; provided that the entity or person receiving or succeeding to the assets of the Company assumes the Company's obligations. 8. INDEPENDENT CONTRACTOR Nothing in this Agreement shall in any way be construed to constitute Consultant as an agent, employee or representative of the Company, but Consultant shall perform the Services hereunder as an independent contractor. Consultant agrees to furnish (or reimburse the Company for) all tools and materials necessary to accomplish this contract, and shall incur all expenses associated with performance, except as expressly provided on Exhibit A of this Agreement. Consultant acknowledges and agrees that Consultant is obligated to report as income all compensation received by Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges the obligation to pay all self-employment and other taxes thereon. Consultant further agrees to indemnify the -4- Company and hold it harmless to the extent of any obligation imposed on Company (i) to pay any withholding taxes or similar items; or (ii) resulting from Consultant's being determined not to be an independent contractor. 9. ARBITRATION AND EQUITABLE RELIEF (a) Except as provided in Section 9(b) below, the Company and Consultant agree that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Santa Clara County, California, in accordance with the rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court of competent jurisdiction. The Company and Consultant shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its respective counsel fees and expenses. (b) Consultant agrees that it would be impossible or inadequate to measure and calculate the Company's damages from any breach of the covenants set forth in Sections 2 or 3 herein. Accordingly, Consultant agrees that if Consultant breaches Sections 2 or 3, the Company will have available, in addition to any other right or remedy available, the right to obtain from any court of competent jurisdiction an injunction restraining such breach or threatened breach and specific performance of any such provision. Consultant further agrees that no bond or other security shall be required in obtaining such equitable relief and Consultant hereby consents to the issuances of such injunction and to the ordering of such specific performance. 10. GOVERNING LAW This Agreement shall be governed by the laws of the State of California. -5- 11. ENTIRE AGREEMENT This Agreement is the entire agreement of the parties and supersedes any prior agreements between them with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CONSULTANT: AMPHORA DISCOVERY CORP. /s/ Michael R. Knapp By: /s/ Martin Haslanger - --------------------------------- ------------------------------------ Michael R. Knapp Title: President & CEO --------------------------------- Address: 738 Glenmere Way Address: ------------------------ Emerald Hills, CA 94062 -6- EXHIBIT A SERVICES AND COMPENSATION 1. Contact. Consultant's principal Company contact: Name: ______________________________________ Title: _____________________________________ 2. Services. Consultant will provide advisory services to the Company from time to time as reasonably requested by the Company's Chief Executive Officer or Board of Directors. 3. Compensation. (a) Consultant shall not be entitled to any cash compensation for services rendered hereunder. The Company shall reimburse Consultant for all reasonable travel and living expenses incurred by Consultant in performing Services pursuant to this Agreement, provided Consultant receives prior written consent from an authorized agent of the Company prior to incurring such expenses. (b) Consultant shall submit all statements for expenses in a form prescribed by the Company and such statement shall be approved by the contact person listed above or by his or her supervisor. (c) Subject to the approval of the Board of Directors, the Company shall issue to Consultant, pursuant to the Restricted Stock Purchase Agreement attached hereto as Annex A (the "RSPA") 900,000 shares of the Company's Common Stock at a price per share of $0.10. The RSPA shall be in full satisfaction of any previous obligations of the Company to issue options, stock appreciation rights, membership units, equity, stock, or other securities or to pay royalties, bonuses, or other compensation to Consultant. EX-10.35 5 f76917ex10-35.txt EXHIBIT 10.35 Exhibit 10.35 AMPHORA DISCOVERY CORP. KNAPP FOUNDER RESTRICTED STOCK PURCHASE AGREEMENT This Restricted Stock Purchase Agreement (the "Agreement") is entered into as of October 8, 2001, by and between Amphora Discovery Corp., a Delaware corporation (the "Company"), and Michael R. Knapp ("Purchaser"). Whereas in order to give the Purchaser an opportunity to acquire an equity interest in the Company and in connection with the Consulting Agreement, dated as of even date hereof, between the Company and the Purchaser (the "Consulting Agreement"), the Company is willing to sell to the Purchaser and the Purchaser desires to purchase shares of Common Stock according to the terms and conditions contained herein. Therefore, in consideration of the mutual covenants and representations set forth herein and in the Consulting Agreement, the Company and the Purchaser agree as follows: 1. SALE OF STOCK. The Company hereby agrees to sell to Purchaser and Purchaser hereby agrees to purchase an aggregate of 900,000 shares of the Company's Common Stock (the "Shares"), at a purchase price of $0.10 per share (the "Purchase Price") representing the current fair market value of such shares as determined by the Company's Board of Directors, for an aggregate purchase price of $90,000.00. 2. PAYMENT OF PURCHASE PRICE. The Purchase Price for the Shares shall be paid, in part, by delivery to the Company at the time of execution of this Agreement of a check in the amount of $900.00 made payable to the Company, and the remainder of the Purchase Price shall be paid by cancellation of all amounts owed by the Company to the Purchaser for services rendered by the Purchaser to the Company prior to the date hereof, including, but not limited to, services provided by the Purchaser in connection with the formation and funding of the Company. 3. DEFINITIONS. (a) "Shares" refers to the purchased Shares and all shares received in respect thereof as a consequence of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, reorganizations or the like, and all new, substituted or additional securities or other properties to which Purchaser is or may be entitled by reason of Purchaser's ownership of the Shares. (b) "Unvested Shares" shall mean any of the Shares subject to the Company's Repurchase Option described in Section 5 which have not yet been released pursuant to Section 4 below from such Repurchase Option. (c) "Repurchase Option" shall have the meaning set forth in Section 5. (d) "Cause" shall mean any of the following: (i) the willful failure by Purchaser to substantially perform its duties with the Company (other than due to Purchaser's incapacity as a result of physical or mental illness); (ii) the willful engaging by Purchaser in conduct which is determined by the Board of Directors of the Company to be materially adverse to the Company, its business or reputation, or which constitutes gross misconduct; (iii) Purchaser's material breach of the terms of this Agreement, the Consulting Agreement, or any other agreements between the Purchaser and the Company; (iv) Purchaser's refusal to serve as a member of the Board of Directors of the Company if requested by the Company; (v) Purchaser's voluntary termination of the Consulting Agreement; or (vi) Purchaser's conviction for or admission or plea of no contest with respect to a felony involving moral turpitude, an act of fraud against the Company, the misappropriation of material property belonging to the Company or an act of violence against an officer, director, employee or consultant of the Company; provided, however, that in the event that any of the foregoing events in (i) (ii) or (iii) is capable of being cured, the Company shall provide written notice to Purchaser describing the nature of such event, and Purchaser shall thereafter have thirty (30) business days from the date of delivery of such notice to cure such event. 4. VESTING. The Shares shall vest and be released from the Company's Repurchase Option in accordance with the following provisions: (a) One Hundred percent (100%) of the Shares shall be subject to the Company's Repurchase Option as of the date hereof. The Shares subject to the Repurchase Option shall be released from such Repurchase Option as follows: (i) Fifty percent (50%) of the Shares shall be released as of the date of the closing of the Company's proposed Series A Preferred Stock financing (the "Vesting Start Date"); (ii) One-ninety-sixth (1/96) of the Shares shall be released one (1) month after the Vesting Start Date; and (iii) an additional one-ninety-sixth (1/96) of the subject Shares shall be released each full month thereafter, provided that Purchaser continues to remain available to serve as a member of the Company's Board of Directors or provide advisory services to the Company (the "Services") during such period. If the Services of the Purchaser are terminated by the Company other than for Cause, all Shares shall be immediately released from the Company's Repurchase Option. The Shares which have been released from the Company's Repurchase Option shall be delivered to the Purchaser at the Purchaser's request 5. REPURCHASE OPTION. (a) Repurchase. Effective as of the date (the "Expiration Date") that the Purchaser voluntarily ceases providing Services to the Company or if the Services are terminated by the Company for Cause, the Company or its assignee shall have an irrevocable, exclusive option (the "Repurchase Option") for a period of ninety (90) days from the Expiration Date to repurchase at the Purchase Price up to that number of shares which shall constitute Unvested Shares as of the Expiration Date. (b) Mechanics of Repurchase. In order to exercise the Repurchase Option, the Company shall deliver written notice of exercise to Purchaser within the time period specified in paragraph 5(a) above. The Company shall pay to Purchaser within the time period specified in paragraph 5(a), the aggregate repurchase price by check. Upon delivery of such notice, (i) the Company or its assignee shall become the legal and beneficial owner of the Shares being -2- repurchased and all rights and interests therein or relating thereto; (ii) the Company shall have the right to retain and transfer to its own name or the name of its assignee the repurchased Shares; and (iii) Purchaser shall retain solely the right to receive the payment for the Shares so repurchased. 6. RESTRICTIONS ON TRANSFER. Except for the transfer of the Shares to the Company or its assignee as contemplated by this Agreement, no Shares or any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until the release of such Shares from the Repurchase Option in accordance with the provisions of this Agreement, provided that the Purchaser may transfer all or any of the shares subject to the Repurchase Option to its spouse, children, parents or any other member of his immediate family, siblings, parents of siblings and siblings of spouse, or any trust or trust for their benefit, as long as any such transferee agrees in writing to be bound by this Agreement to the same extent as the Purchaser and executes such other documentation as may reasonably be requested by the Company or its legal counsel in connection with such transfer. 7. LEGENDS. The share certificate evidencing the Shares issued hereunder shall be endorsed with the following restrictive legends (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT SAYING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. THE SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS AVAILABLE UPON THE REQUEST OF THE REGISTERED HOLDER HEREOF TO THE SECRETARY OF THE COMPANY. 8. ADJUSTMENTS FOR STOCK SPLITS, ETC. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, stock split, recapitalization, merger, reorganization or other change in the Shares which may be made by the Company after the date of this Agreement. 9. ESCROW. As security for the faithful performance of this Agreement, Purchaser agrees, immediately upon receipt of the certificate(s) evidencing the Shares, to deliver such certificate(s), together with a stock power and assignment in the form attached hereto as Exhibit 2, executed by Purchaser (with the date and number of Shares left blank), to the Secretary of the Company ("Escrow Agent"). Escrow Agent shall hold such Shares pursuant to an escrow agreement in the form attached hereto as Exhibit 1, by which Escrow Agent shall be authorized to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with -3- the terms of this Agreement. The Shares shall be released from escrow upon termination of the Repurchase Option provided for in Section 5. 10. MARKET STAND-OFF AGREEMENT. Purchaser and each transferee of the Shares issued hereunder agrees by acceptance hereof or thereof not to sell, make a short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by Purchaser without the prior written consent of the Company or the underwriters managing the initial underwritten public offering of the Company's securities, for such period of time (not to exceed one hundred eighty (180) days) as may be requested by the Company and the managing underwriter, and further agrees to execute any agreement reflecting the above provision as may be requested by the underwriters at the time of any such initial public offering. 11. PURCHASER'S REPRESENTATIONS. In connection with the Purchaser's purchase of the Shares, the Purchaser hereby represents and warrants to the Company as follows: (a) Investment Intent; Capacity to Protect Interests. The Purchaser is purchasing the Shares solely for her own account for investment and not with a view to or for sale in connection with any distribution of the Shares or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Shares or any portion thereof in any transaction other than a transaction exempt from registration under the Securities Act of 1933, as amended (the "Act"). The Purchaser also represents that the entire legal and beneficial interest of the Shares is being purchased, and will be held, for the Purchaser's account only, and neither in whole or in part for any other person. Purchaser either has a pre-existing business or personal relationship with the Company and has the capacity to evaluate the merits and risks of an investment in the Company and to protect Purchaser's own interests in connection with this transaction. (b) Residence. The Purchaser's principal residence is located at the address indicated beneath the Purchaser's signature below. (c) Information Concerning the Company. The Purchaser has heretofore discussed the Company and its plans, operations and financial condition with the Company's officers and has heretofore received all such information as the Purchaser has deemed necessary and appropriate to enable the Purchaser to evaluate the financial risk inherent in making an investment in the Shares, and the Purchaser has received satisfactory and complete information concerning the business and financial condition of the Company in response to all inquiries in respect thereof. (d) Economic Risk. The Purchaser realizes that the purchase of the Shares will be a highly speculative investment and involves a high degree of risk, and the Purchaser is able, without impairing financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss on the Purchaser's investment. (e) Restricted Securities. The Purchaser understands and acknowledges that: (i) the sale of the Shares has not been registered under the Act, and the Shares must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available and the Company is under no obligation to register the Shares; -4- (ii) the share certificate representing the Shares will be stamped with the legends specified in Section 7 hereof; and (iii) the Company will make a notation in its records of the aforementioned restrictions on transfer and legends. (f) Disposition under Rules 144 and 701. The Purchaser understands that the Shares are restricted securities within the meaning of Rule 144 promulgated under the Act; that the exemption from registration under Rule 144 will not be available in any event for at least one (1) year from the date of purchase and payment of the Shares (unless Rule 701 promulgated under the Act is available), and even then will not be available unless (i) a public trading market then exists for the Common Stock of the Company; (ii) adequate information concerning the Company is then available to the public; and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions. The Purchaser understands that the resale provisions of Rule 701, if available, will not apply until ninety (90) days after the Company becomes subject to reporting obligations under the Exchange Act. There can be no assurance that the requirements of Rule 144 or Rule 701 will be met, or that the Shares will ever be saleable. (g) Section 83(b) Election. The Purchaser understands that Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the difference between the amount paid for the Shares and the fair market value of the Shares as of the date any restrictions on the Shares lapse. In this context, "restriction" means the right of the Company to buy back the stock pursuant to the Repurchase Option. The Purchaser understands that he may elect to be taxed at the time the Shares are purchased rather than when and as the Repurchase Option expires by filing an election under Section 83(b) of the Code with the I.R.S. within thirty (30) days from the date of purchase. Even if the fair market value of the Shares equals the amount paid for the Shares, the election must be made to avoid adverse tax consequences in the future. The form for making this election is attached as Exhibit 3 hereto. The Purchaser understands that failure to make this filing timely will result in the recognition of ordinary income by the Purchaser, as the Repurchase Option lapses, on the difference between the purchase price and the fair market value of the Shares at the time such restrictions lapse. THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF. 12. GENERAL PROVISIONS. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California as they apply to contracts entered into and wholly to be performed within such state. -5- (b) This Agreement, including its Exhibits, represents the entire agreement between the parties with respect to the purchase of the Shares by the Purchaser. (c) Any notice, demand or request required or permitted to be given by either the Company or Purchaser pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered, if delivered personally; three (3) business days after the business day of deposit in the U.S. mail, by registered or certified mail with postage prepaid; one (1) business day after the business day of facsimile transmission, if a confirmation copy is sent by first class mail with postage prepaid; or, one (1) business day after the business day of deposit with Federal Express or similar overnight carrier, freight prepaid; in any such case addressed to any party at such party's address as set forth at the end of this Agreement or such other address as the party may designate by notifying the other in writing. (d) The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company. (e) Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party's right to assert all other legal remedies available to it under the circumstances. (f) Purchaser agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement. * * * * -6- By Purchaser's signature below, Purchaser represents that Purchaser hereby accepts this Agreement subject to all of the terms and provisions thereof. Purchaser has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. "COMPANY" AMPHORA DISCOVERY CORP. By: /s/ Martin Haslanger ------------------------------------- Name: Martin Haslanger ----------------------------------- Title: President & CEO ---------------------------------- "PURCHASER" /s/ Michael R. Knapp - ----------------------------------------- Michael R. Knapp - ----------------------------------------- 738 Glenmere Way, Emerald Hills, CA 94062 - ----------------------------------------- Residence Address -7- CONSENT OF SPOUSE The undersigned spouse of Michael R. Knapp has read and approves the foregoing Agreement. In consideration of the Company's granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest shall be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any right under the Agreement. /s/ Marianne Knapp --------------------------------------- EXHIBIT 1 JOINT ESCROW INSTRUCTIONS October 8, 2001 Secretary Amphora Discovery Corp. c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304-1050 Dear Sir: As Escrow Agent for both Amphora Discovery Corp., a Delaware Corporation (the "Company"), and the undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (the "Agreement") between the Company and the undersigned, to which a copy of these Joint Escrow Instructions is attached as Exhibit 1, in accordance with the following instructions: 1. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "Company") exercises the Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of the notice. 2. At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, in accordance with the Agreement, against the simultaneous delivery to you of the purchase price (by check) for the number of shares of stock being purchased pursuant to the exercise of the Repurchase Option. 3. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to the shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as her attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 4. Upon written request of Purchaser, but no more than once each year, unless the Repurchase Option has been exercised, you will deliver to Purchaser a certificate or certificates representing so many shares of stock as are not then Unvested Shares subject to the Repurchase Option. Within one hundred twenty (120) days after cessation of Purchaser's employment with or services to the Company, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares sold and issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Repurchase Option. 5. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 6. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 7. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any duly approved arbitrator or court of competent jurisdiction. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 8. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 9. You shall not be liable for the outlawing of any rights under any applicable statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you. 10. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. 11. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 12. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 13. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a duly appointed arbitrator or court of -2- competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 14. At the option of either the Company or Purchaser, any and all disputes or controversies arising from or respecting this agreement shall be decided by binding arbitration under the rules of the American Arbitration Association. The arbitration shall require one arbitrator. Arbitration shall take place in Santa Clara County, California or any other location mutually agreeable to the parties. At the request of either party, arbitration proceedings will be conducted in the utmost secrecy. The arbitrator shall be able to decree any and all relief of an equitable nature and to award damages, with or without an accounting and costs. The decree of judgment of an award rendered by the arbitrator may be entered in any court of competent jurisdiction. 15. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given when delivered, if given by personal delivery: three (3) business days after the business day of deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid; one (1) business day after the business day of facsimile transmission, if a confirmation copy is sent via first class mail, postage prepaid; or one (1) business day after the business day of deposit with Federal Express or similar overnight carrier, freight prepaid; in any such case addressed to each of the other parties thereunto entitled at the addresses indicated in the Company's records, or at such other addresses as a party may designate by ten (10) days advance written notice to each of the other parties hereto. -3- 16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. Very truly yours, COMPANY: AMPHORA DISCOVERY CORP. A Delaware Corporation By: /s/ Martin Haslanger ----------------------------------- Title: President -------------------------------- PURCHASER: /s/ Michael R. Knapp --------------------------------------- (Signature) Michael R. Knapp --------------------------------------- (Print Name) ESCROW AGENT: /s/ Michael O'Donnell - -------------------------------- Secretary -4- EXHIBIT 2 STOCK POWER AND ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Purchase Agreement dated as of ___________, 20____ the undersigned hereby sells, assigns and transfers unto ___________________________________________________, shares of the Common Stock of Amphora Discovery Corp., a Delaware Corporation (the "Company"), standing in the undersigned's name on the books of the Company represented by Certificate No. _____ delivered herewith, and does hereby irrevocably constitute the Secretary of the Company as attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company. Dated: ___________________, 20___ _______________________________________ (Signature) _______________________________________ (Print Name) This Stock Power may only be utilized for the repurchase of Shares by the Company in accordance with the provisions of the Restricted Stock Purchase Agreement dated as of ____________, 20____ by and between the signatory hereto and the Company. EXHIBIT 3 ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986 The undersigned Taxpayer hereby elects, pursuant to the provisions of Sections 55-56 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in alternative minimum taxable income for the Taxpayer's current taxable year, as compensation for services, the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property. 1. TAXPAYER'S NAME: __________________________________________ SPOUSE'S NAME: __________________________________________ TAXPAYER'S ADDRESS: __________________________________________ SPOUSE'S ADDRESS: __________________________________________ __________________________________________ TAXPAYER IDENTIFICATION NUMBER: __________________________________________ SPOUSE IDENTIFICATION NUMBER: __________________________________________ 2. The property with respect to which the election is made is described as follows: 900,000 shares of Common Stock of Amphora Discovery Corp., a Delaware Corporation (the "Company"), which is the corporation for whom the Taxpayer has performed services. 3. The date on which the shares were transferred was _____________, 20____, and this election is made for calendar year 20____. 4. The shares are subject to the following restrictions: The Company may repurchase all or a portion of the shares at the Taxpayer's original purchase price under certain conditions at the time of termination of services by the Purchaser to the Company. 5. The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $0.10 per share at the time of transfer. 6. The amount (if any) paid for such shares was $0.10 per share. 7. The Taxpayer has submitted a copy of this statement to the Company as the Taxpayer's employer or the corporation for whom the Taxpayer has performed services. THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS") (AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS) WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER'S INCOME TAX RETURNS FOR THE CALENDAR YEAR ABOVE STATED. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS. Dated: __________________________ _______________________________________ Taxpayer's Signature The undersigned spouse of Taxpayer joins in this election. Dated: __________________________ _______________________________________ Spouse's Signature -2- EX-10.36 6 f76917ex10-36.txt EXHIBIT 10.36 Exhibit 10.36 AMPHORA DISCOVERY CORP. KNIGHTON CONSULTING AGREEMENT This Consulting Agreement ("Agreement") is made and entered into as of the 14th day of October, 2001 by and between Amphora Discovery Corp., a Delaware corporation (the "Company"), and James L. Knighton ("Consultant"). The Company desires to retain Consultant as an independent contractor to perform consulting services for the Company and Consultant is willing to perform such services, on terms set forth more fully below. In consideration of the mutual promises contained herein, the parties agree as follows: 1. SERVICES AND COMPENSATION (a) Consultant agrees to perform for the Company the services described in Exhibit A ("Services"). (b) The Company agrees to pay Consultant the compensation set forth in Exhibit A for the performance of the Services. 2. CONFIDENTIALITY (a) "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, customers, customer lists, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed by the Company either directly or indirectly in writing, orally or by drawings or inspection of parts or equipment. (b) Consultant will not, during or subsequent to the term of this Agreement, use the Company's Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or disclose the Company's Confidential Information to any third party, and it is understood that said Confidential Information shall remain the sole property of the Company. Consultant further agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information. Confidential Information does not include information which: (i) is known to Consultant at the time of disclosure to Consultant by the Company as evidenced by written records of Consultant; (ii) has become publicly known and made generally available through no wrongful act of Consultant; or (iii) has been rightfully received by Consultant from a third party who is authorized to make such disclosure. Without the Company's prior written approval, Consultant will not directly or indirectly disclose to anyone the terms of this Agreement. (c) Consultant agrees that Consultant will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former or current employer or other person or entity with which Consultant has an agreement or duty to keep in confidence information acquired by Consultant in confidence, if any, and that Consultant will not bring onto the premises of the Company any unpublished document or proprietary information belonging to such employer, person or entity unless consented to in writing by such employer, person or entity. Consultant will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys fees and costs of suit, arising out of or in connection with any violation or claimed violation of a third party's rights resulting in whole or in part from the Company's use of the work product of Consultant under this Agreement. (d) Consultant recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. Consultant agrees that Consultant owes the Company and such third parties, during the term of this Agreement and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services for the Company consistent with the Company's agreement with such third party. (e) Upon the termination of this Agreement, or upon Company's earlier request, Consultant will deliver to the Company all of the Company's property or Confidential Information in tangible form that Consultant may have in Consultant's possession or control. 3. OWNERSHIP (a) Consultant agrees that all copyrightable material, notes, records, drawings, designs, inventions, improvements, developments, discoveries and trade secrets (collectively, "Inventions") conceived, made or discovered by Consultant, solely or in collaboration with others, during the period of this Agreement that Consultant may undertake, investigate or experiment with, or which Consultant may become associated with in work, investigation or experimentation, in performing the Services hereunder, are the sole property of the Company. In addition, any Inventions which constitute copyrightable subject matter shall be considered "works made for hire" as that term is defined in the United States Copyright Act. Consultant further agrees to assign (or cause to be assigned) and does hereby assign fully to the Company all such Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. (b) Consultant agrees to assist Company, or its designee, at the Company's expense, in every proper way to secure the Company's rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Consultant further agrees that Consultant's obligation to execute or cause to -2- be executed, when it is in Consultant's power to do so, any such instrument or papers shall continue after the termination of this Agreement. (c) Consultant agrees that if in the course of performing the Services, Consultant incorporates into any Invention developed hereunder any invention, improvement, development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item as part of or in connection with such Invention. (d) Consultant agrees that if the Company is unable because of Consultant's unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure Consultant's signature to apply for or to pursue any application for any United States or foreign patents or mask work or copyright registrations covering the Inventions assigned to the Company above, then Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant's agent and attorney in fact, to act for and in Consultant's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright and mask work registrations thereon with the same legal force and effect as if executed by Consultant. 4. REPORTS Consultant agrees that it will from time to time during the term of this Agreement or any extension thereof keep the Company advised as to Consultant's progress in performing the Services hereunder and that Consultant will, as requested by the Company, prepare written reports with respect thereto. It is understood that the time required in the preparation of such written reports shall be considered time devoted to the performance of Consultant's Services. 5. CONFLICTING OBLIGATIONS (a) Consultant certifies that Consultant has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, or that would preclude Consultant from complying with the provisions hereof, and further certifies that Consultant will not enter into any such conflicting Agreement during the term of this Agreement. Consultant further certifies that Consultant's act of entering into this Agreement, purchasing stock of the Company, and serving as a consultant to the Company do not violate any outstanding agreement, obligation, or employment arrangement of Consultant's. Consultant further agrees that he will not perform any services for the Company which would conflict with any agreement or obligation of Consultant or which would cause or result in any other person or entity having any ownership interest in any intellectual property of the Company's. (b) In view of Consultant's access to the Company's trade secrets and proprietary know-how, Consultant further agrees that Consultant will not, without Company's prior written consent, design identical or substantially similar designs as those developed under this Agreement for any -3- third party during the term of this Agreement and for a period of twelve (12) months after the termination of this Agreement. 6. TERM AND TERMINATION (a) This Agreement will commence on the date first written above and will continue until final completion of the Services or termination as provided below. (b) Either party may terminate this Agreement upon giving thirty (30) days prior written notice thereof to the other party. Any such notice shall be addressed to the address shown below or such other address as either party may notify the other of and shall be deemed given upon delivery if personally delivered, or forty-eight (48) hours after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested. The Company may terminate this Agreement immediately and without prior notice if Consultant refuses to or is unable to perform the Services or is in breach of any material provision of this Agreement. (c) Upon such termination all rights and duties of the parties toward each other shall cease except: (i) that the Company shall be obliged to pay, within thirty (30) days of the effective date of termination, all amounts owing to Consultant for unpaid Services and related expenses, if any, in accordance with the provisions of Section 1 (Services and Compensation) hereof; and (ii) Sections 2 (Confidentiality), 3 (Ownership) and 8 (Independent Contractors) shall survive termination of this Agreement. 7. ASSIGNMENT Neither this Agreement nor any right hereunder may be assigned by any party hereto, except that the Company may assign this Agreement in connection with (1) a merger or consolidation of the Company, (2) a sale or assignment of substantially all its assets, or (3) any other transaction which results in another entity or person owning substantially all of the assets of the Company; provided that the entity or person receiving or succeeding to the assets of the Company assumes the Company's obligations. 8. INDEPENDENT CONTRACTOR Nothing in this Agreement shall in any way be construed to constitute Consultant as an agent, employee or representative of the Company, but Consultant shall perform the Services hereunder as an independent contractor. Consultant agrees to furnish (or reimburse the Company for) all tools and materials necessary to accomplish this contract, and shall incur all expenses associated with performance, except as expressly provided on Exhibit A of this Agreement. Consultant acknowledges and agrees that Consultant is obligated to report as income all compensation received by Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges the obligation to pay all self-employment and other taxes thereon. Consultant further agrees to indemnify the -4- Company and hold it harmless to the extent of any obligation imposed on Company (i) to pay any withholding taxes or similar items; or (ii) resulting from Consultant's being determined not to be an independent contractor. 9. ARBITRATION AND EQUITABLE RELIEF (a) Except as provided in Section 9(b) below, the Company and Consultant agree that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Santa Clara County, California, in accordance with the rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court of competent jurisdiction. The Company and Consultant shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its respective counsel fees and expenses. (b) Consultant agrees that it would be impossible or inadequate to measure and calculate the Company's damages from any breach of the covenants set forth in Sections 2 or 3 herein. Accordingly, Consultant agrees that if Consultant breaches Sections 2 or 3, the Company will have available, in addition to any other right or remedy available, the right to obtain from any court of competent jurisdiction an injunction restraining such breach or threatened breach and specific performance of any such provision. Consultant further agrees that no bond or other security shall be required in obtaining such equitable relief and Consultant hereby consents to the issuances of such injunction and to the ordering of such specific performance. 10. GOVERNING LAW This Agreement shall be governed by the laws of the State of California. -5- 11. ENTIRE AGREEMENT This Agreement is the entire agreement of the parties and supersedes any prior agreements between them with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CONSULTANT: AMPHORA DISCOVERY CORP. /s/ James L. Knighton By: /s/ Martin Haslanger - -------------------------------- ----------------------------------- James L. Knighton Title: President & CEO -------------------------------- Address: 153 Terrance Drive Address: ----------------------- San Francisco, CA 94127 ----------------------- ----------------------- -6- EXHIBIT A SERVICES AND COMPENSATION 1. Contact. Consultant's principal Company contact: Name: _______________________________ Title: _______________________________ 2. Services. Consultant will provide advisory services to the Company from time to time as reasonably requested by the Company's Chief Executive Officer or Board of Directors. 3. Compensation. (a) Consultant shall not be entitled to any cash compensation for services rendered hereunder. The Company shall reimburse Consultant for all reasonable travel and living expenses incurred by Consultant in performing Services pursuant to this Agreement, provided Consultant receives prior written consent from an authorized agent of the Company prior to incurring such expenses. (b) Consultant shall submit all statements for expenses in a form prescribed by the Company and such statement shall be approved by the contact person listed above or by his or her supervisor. (c) Subject to the approval of the Board of Directors, the Company shall issue to Consultant, pursuant to the Restricted Stock Purchase Agreement attached hereto as Annex A (the "RSPA") 450,000 shares of the Company's Common Stock at a price per share of $0.10. The RSPA shall be in full satisfaction of any previous obligations of the Company to issue options, stock appreciation rights, membership units, equity, stock, or other securities or to pay royalties, bonuses, or other compensation to Consultant. EX-10.37 7 f76917ex10-37.txt EXHIBIT 10.37 Exhibit 10.37 AMPHORA DISCOVERY CORP. KNIGHTON FOUNDER RESTRICTED STOCK PURCHASE AGREEMENT This Restricted Stock Purchase Agreement (the "Agreement") is entered into as of October 14, 2001, by and between Amphora Discovery Corp., a Delaware corporation (the "Company"), and James L. Knighton ("Purchaser"). Whereas in order to give the Purchaser an opportunity to acquire an equity interest in the Company and in connection with the Consulting Agreement, dated as of even date hereof, between the Company and the Purchaser (the "Consulting Agreement"), the Company is willing to sell to the Purchaser and the Purchaser desires to purchase shares of Common Stock according to the terms and conditions contained herein. Therefore, in consideration of the mutual covenants and representations set forth herein and in the Consulting Agreement, the Company and the Purchaser agree as follows: 1. SALE OF STOCK. The Company hereby agrees to sell to Purchaser and Purchaser hereby agrees to purchase an aggregate of 450,000 shares of the Company's Common Stock (the "Shares"), at a purchase price of $0.10 per share (the "Purchase Price") representing the current fair market value of such shares as determined by the Company's Board of Directors, for an aggregate purchase price of $45,000.00. 2. PAYMENT OF PURCHASE PRICE. The Purchase Price for the Shares shall be paid, in part, by delivery to the Company at the time of execution of this Agreement of a check in the amount of $450.00 made payable to the Company, and the remainder of the Purchase Price shall be paid by cancellation of all amounts owed by the Company to the Purchaser for services rendered by the Purchaser to the Company prior to the date hereof, including, but not limited to, services provided by the Purchaser in connection with the formation and funding of the Company. 3. DEFINITIONS. (a) "Shares" refers to the purchased Shares and all shares received in respect thereof as a consequence of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, reorganizations or the like, and all new, substituted or additional securities or other properties to which Purchaser is or may be entitled by reason of Purchaser's ownership of the Shares. (b) "Unvested Shares" shall mean any of the Shares subject to the Company's Repurchase Option described in Section 5 which have not yet been released pursuant to Section 4 below from such Repurchase Option. (c) "Repurchase Option" shall have the meaning set forth in Section 5. (d) "Cause" shall mean any of the following: (i) the willful failure by Purchaser to substantially perform its duties with the Company (other than due to Purchaser's incapacity as a result of physical or mental illness); (ii) the willful engaging by Purchaser in conduct which is determined by the Board of Directors of the Company to be materially adverse to the Company, its business or reputation, or which constitutes gross misconduct; (iii) Purchaser's material breach of the terms of this Agreement, the Consulting Agreement, or any other agreements between the Purchaser and the Company; (iv) Purchaser's refusal to serve as a member of the Board of Directors of the Company if requested by the Company; (v) Purchaser's voluntary termination of the Consulting Agreement; or (vi) Purchaser's conviction for or admission or plea of no contest with respect to a felony involving moral turpitude, an act of fraud against the Company, the misappropriation of material property belonging to the Company or an act of violence against an officer, director, employee or consultant of the Company; provided, however, that in the event that any of the foregoing events in (i) (ii) or (iii) is capable of being cured, the Company shall provide written notice to Purchaser describing the nature of such event, and Purchaser shall thereafter have thirty (30) business days from the date of delivery of such notice to cure such event. 4. VESTING. The Shares shall vest and be released from the Company's Repurchase Option in accordance with the following provisions: (a) One Hundred percent (100%) of the Shares shall be subject to the Company's Repurchase Option as of the date hereof. The Shares subject to the Repurchase Option shall be released from such Repurchase Option as follows: (i) Fifty percent (50%) of the Shares shall be released as of the date of the closing of the Company's proposed Series A Preferred Stock financing (the "Vesting Start Date"); (ii) One-ninety-sixth (1/96) of the Shares shall be released one (1) month after the Vesting Start Date; and (iii) an additional one-ninety-sixth (1/96) of the subject Shares shall be released each full month thereafter, provided that Purchaser continues to remain available to serve as a member of the Company's Board of Directors or provide advisory services to the Company (the "Services") during such period. If the Services of the Purchaser are terminated by the Company other than for Cause, all Shares shall be immediately released from the Company's Repurchase Option. The Shares which have been released from the Company's Repurchase Option shall be delivered to the Purchaser at the Purchaser's request 5. REPURCHASE OPTION. (a) Repurchase. Effective as of the date (the "Expiration Date") that the Purchaser voluntarily ceases providing Services to the Company or if the Services are terminated by the Company for Cause, the Company or its assignee shall have an irrevocable, exclusive option (the "Repurchase Option") for a period of ninety (90) days from the Expiration Date to repurchase at the Purchase Price up to that number of shares which shall constitute Unvested Shares as of the Expiration Date. (b) Mechanics of Repurchase. In order to exercise the Repurchase Option, the Company shall deliver written notice of exercise to Purchaser within the time period specified in paragraph 5(a) above. The Company shall pay to Purchaser within the time period specified in paragraph 5(a), the aggregate repurchase price by check. Upon delivery of such notice, (i) the Company or its assignee shall become the legal and beneficial owner of the Shares being -2- repurchased and all rights and interests therein or relating thereto; (ii) the Company shall have the right to retain and transfer to its own name or the name of its assignee the repurchased Shares; and (iii) Purchaser shall retain solely the right to receive the payment for the Shares so repurchased. 6. RESTRICTIONS ON TRANSFER. Except for the transfer of the Shares to the Company or its assignee as contemplated by this Agreement, no Shares or any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until the release of such Shares from the Repurchase Option in accordance with the provisions of this Agreement, provided that the Purchaser may transfer all or any of the shares subject to the Repurchase Option to its spouse, children, parents or any other member of his immediate family, siblings, parents of siblings and siblings of spouse, or any trust or trust for their benefit, as long as any such transferee agrees in writing to be bound by this Agreement to the same extent as the Purchaser and executes such other documentation as may reasonably be requested by the Company or its legal counsel in connection with such transfer. 7. LEGENDS. The share certificate evidencing the Shares issued hereunder shall be endorsed with the following restrictive legends (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT SAYING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. THE SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS AVAILABLE UPON THE REQUEST OF THE REGISTERED HOLDER HEREOF TO THE SECRETARY OF THE COMPANY. 8. ADJUSTMENTS FOR STOCK SPLITS, ETC. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, stock split, recapitalization, merger, reorganization or other change in the Shares which may be made by the Company after the date of this Agreement. 9. ESCROW. As security for the faithful performance of this Agreement, Purchaser agrees, immediately upon receipt of the certificate(s) evidencing the Shares, to deliver such certificate(s), together with a stock power and assignment in the form attached hereto as Exhibit 2, executed by Purchaser (with the date and number of Shares left blank), to the Secretary of the Company ("Escrow Agent"). Escrow Agent shall hold such Shares pursuant to an escrow agreement in the form attached hereto as Exhibit 1, by which Escrow Agent shall be authorized to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with -3- the terms of this Agreement. The Shares shall be released from escrow upon termination of the Repurchase Option provided for in Section 5. 10. MARKET STAND-OFF AGREEMENT. Purchaser and each transferee of the Shares issued hereunder agrees by acceptance hereof or thereof not to sell, make a short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by Purchaser without the prior written consent of the Company or the underwriters managing the initial underwritten public offering of the Company's securities, for such period of time (not to exceed one hundred eighty (180) days) as may be requested by the Company and the managing underwriter, and further agrees to execute any agreement reflecting the above provision as may be requested by the underwriters at the time of any such initial public offering. 11. PURCHASER'S REPRESENTATIONS. In connection with the Purchaser's purchase of the Shares, the Purchaser hereby represents and warrants to the Company as follows: (a) Investment Intent. Capacity to Protect Interests. The Purchaser is purchasing the Shares solely for her own account for investment and not with a view to or for sale in connection with any distribution of the Shares or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Shares or any portion thereof in any transaction other than a transaction exempt from registration under the Securities Act of 1933, as amended (the "Act"). The Purchaser also represents that the entire legal and beneficial interest of the Shares is being purchased, and will be held, for the Purchaser's account only, and neither in whole or in part for any other person. Purchaser either has a pre-existing business or personal relationship with the Company and has the capacity to evaluate the merits and risks of an investment in the Company and to protect Purchaser's own interests in connection with this transaction. (b) Residence. The Purchaser's principal residence is located at the address indicated beneath the Purchaser's signature below. (c) Information Concerning the Company. The Purchaser has heretofore discussed the Company and its plans, operations and financial condition with the Company's officers and has heretofore received all such information as the Purchaser has deemed necessary and appropriate to enable the Purchaser to evaluate the financial risk inherent in making an investment in the Shares, and the Purchaser has received satisfactory and complete information concerning the business and financial condition of the Company in response to all inquiries in respect thereof. (d) Economic Risk. The Purchaser realizes that the purchase of the Shares will be a highly speculative investment and involves a high degree of risk, and the Purchaser is able, without impairing financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss on the Purchaser's investment. (e) Restricted Securities. The Purchaser understands and acknowledges that: (i) the sale of the Shares has not been registered under the Act, and the Shares must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available and the Company is under no obligation to register the Shares; -4- (ii) the share certificate representing the Shares will be stamped with the legends specified in Section 7 hereof; and (iii) the Company will make a notation in its records of the aforementioned restrictions on transfer and legends. (f) Disposition under Rules 144 and 701. The Purchaser understands that the Shares are restricted securities within the meaning of Rule 144 promulgated under the Act; that the exemption from registration under Rule 144 will not be available in any event for at least one (1) year from the date of purchase and payment of the Shares (unless Rule 701 promulgated under the Act is available), and even then will not be available unless (i) a public trading market then exists for the Common Stock of the Company; (ii) adequate information concerning the Company is then available to the public; and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions. The Purchaser understands that the resale provisions of Rule 701, if available, will not apply until ninety (90) days after the Company becomes subject to reporting obligations under the Exchange Act. There can be no assurance that the requirements of Rule 144 or Rule 701 will be met, or that the Shares will ever be saleable. (g) Section 83(b) Election. The Purchaser understands that Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the difference between the amount paid for the Shares and the fair market value of the Shares as of the date any restrictions on the Shares lapse. In this context, "restriction" means the right of the Company to buy back the stock pursuant to the Repurchase Option. The Purchaser understands that he may elect to be taxed at the time the Shares are purchased rather than when and as the Repurchase Option expires by filing an election under Section 83(b) of the Code with the I.R.S. within thirty (30) days from the date of purchase. Even if the fair market value of the Shares equals the amount paid for the Shares, the election must be made to avoid adverse tax consequences in the future. The form for making this election is attached as Exhibit 3 hereto. The Purchaser understands that failure to make this filing timely will result in the recognition of ordinary income by the Purchaser, as the Repurchase Option lapses, on the difference between the purchase price and the fair market value of the Shares at the time such restrictions lapse. THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF. 12. GENERAL PROVISIONS. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California as they apply to contracts entered into and wholly to be performed within such state. -5- (b) This Agreement, including its Exhibits, represents the entire agreement between the parties with respect to the purchase of the Shares by the Purchaser. (c) Any notice, demand or request required or permitted to be given by either the Company or Purchaser pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered, if delivered personally; three (3) business days after the business day of deposit in the U.S. mail, by registered or certified mail with postage prepaid; one (1) business day after the business day of facsimile transmission, if a confirmation copy is sent by first class mail with postage prepaid; or, one (1) business day after the business day of deposit with Federal Express or similar overnight carrier, freight prepaid; in any such case addressed to any party at such party's address as set forth at the end of this Agreement or such other address as the party may designate by notifying the other in writing. (d) The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company. (e) Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party's right to assert all other legal remedies available to it under the circumstances. (f) Purchaser agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement. * * * * -6- By Purchaser's signature below, Purchaser represents that Purchaser hereby accepts this Agreement subject to all of the terms and provisions thereof. Purchaser has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. "COMPANY" AMPHORA DISCOVERY CORP. By: /s/ Martin Haslanger ----------------------------------- Name: Martin Haslanger --------------------------------- Title: President & CEO -------------------------------- "PURCHASER" /s/ James L. Knighton - --------------------------------------- James L. Knighton - --------------------------------------- 153 Terrace Dr., S.F., CA 94127 - --------------------------------------- Residence Address -7- CONSENT OF SPOUSE The undersigned spouse of James L. Knighton has read and approves the foregoing Agreement. In consideration of the Company's granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest shall be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any right under the Agreement. /s/ Petree Knighton --------------------------------------- EXHIBIT 1 JOINT ESCROW INSTRUCTIONS October 14, 2001 Secretary Amphora Discovery Corp. c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304-1050 Dear Sir: As Escrow Agent for both Amphora Discovery Corp., a Delaware Corporation (the "Company"), and the undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (the "Agreement") between the Company and the undersigned, to which a copy of these Joint Escrow Instructions is attached as Exhibit 1, in accordance with the following instructions: 1. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "Company") exercises the Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of the notice. 2. At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, in accordance with the Agreement, against the simultaneous delivery to you of the purchase price (by check) for the number of shares of stock being purchased pursuant to the exercise of the Repurchase Option. 3. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to the shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as her attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 4. Upon written request of Purchaser, but no more than once each year, unless the Repurchase Option has been exercised, you will deliver to Purchaser a certificate or certificates representing so many shares of stock as are not then Unvested Shares subject to the Repurchase Option. Within one hundred twenty (120) days after cessation of Purchaser's employment with or services to the Company, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares sold and issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Repurchase Option. 5. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 6. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 7. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any duly approved arbitrator or court of competent jurisdiction. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 8. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 9. You shall not be liable for the outlawing of any rights under any applicable statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you. 10. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. 11. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 12. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 13. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized -2- and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a duly appointed arbitrator or court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 14. At the option of either the Company or Purchaser, any and all disputes or controversies arising from or respecting this agreement shall be decided by binding arbitration under the rules of the American Arbitration Association. The arbitration shall require one arbitrator. Arbitration shall take place in Santa Clara County, California or any other location mutually agreeable to the parties. At the request of either party, arbitration proceedings will be conducted in the utmost secrecy. The arbitrator shall be able to decree any and all relief of an equitable nature and to award damages, with or without an accounting and costs. The decree of judgment of an award rendered by the arbitrator may be entered in any court of competent jurisdiction. 15. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given when delivered, if given by personal delivery: three (3) business days after the business day of deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid; one (1) business day after the business day of facsimile transmission, if a confirmation copy is sent via first class mail, postage prepaid; or one (1) business day after the business day of deposit with Federal Express or similar overnight carrier, freight prepaid; in any such case addressed to each of the other parties thereunto entitled at the addresses indicated in the Company's records, or at such other addresses as a party may designate by ten (10) days advance written notice to each of the other parties hereto. -3- 16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. Very truly yours, COMPANY: AMPHORA DISCOVERY CORP. A Delaware Corporation By: /s/ Martin Haslanger ----------------------------------- Title: President & CEO -------------------------------- PURCHASER: /s/ James L. Knighton --------------------------------------- (Signature) James L. Knighton --------------------------------------- (Print Name) ESCROW AGENT: /s/ Michael O'Donnell - -------------------------------- Secretary -4- EXHIBIT 2 STOCK POWER AND ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Purchase Agreement dated as of ___________, 20____ the undersigned hereby sells, assigns and transfers unto ___________________________________________________, shares of the Common Stock of Amphora Discovery Corp., a Delaware Corporation (the "Company"), standing in the undersigned's name on the books of the Company represented by Certificate No. _____ delivered herewith, and does hereby irrevocably constitute the Secretary of the Company as attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company. Dated: ___________________, 20___ _______________________________________ (Signature) _______________________________________ (Print Name) This Stock Power may only be utilized for the repurchase of Shares by the Company in accordance with the provisions of the Restricted Stock Purchase Agreement dated as of ____________, 20____ by and between the signatory hereto and the Company. EXHIBIT 3 ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986 The undersigned Taxpayer hereby elects, pursuant to the provisions of Sections 55-56 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in alternative minimum taxable income for the Taxpayer's current taxable year, as compensation for services, the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property. 1. TAXPAYER'S NAME: __________________________________________ SPOUSE'S NAME: __________________________________________ TAXPAYER'S ADDRESS: __________________________________________ SPOUSE'S ADDRESS: __________________________________________ __________________________________________ TAXPAYER IDENTIFICATION NUMBER: __________________________________________ SPOUSE IDENTIFICATION NUMBER: __________________________________________ 2. The property with respect to which the election is made is described as follows: 450,000 shares of Common Stock of Amphora Discovery Corp., a Delaware Corporation (the "Company"), which is the corporation for whom the Taxpayer has performed services. 3. The date on which the shares were transferred was _____________, 20____, and this election is made for calendar year 20____. 4. The shares are subject to the following restrictions: The Company may repurchase all or a portion of the shares at the Taxpayer's original purchase price under certain conditions at the time of termination of services by the Purchaser to the Company. 5. The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $0.10 per share at the time of transfer. 6. The amount (if any) paid for such shares was $0.10 per share. 7. The Taxpayer has submitted a copy of this statement to the Company as the Taxpayer's employer or the corporation for whom the Taxpayer has performed services. THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS") (AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS) WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER'S INCOME TAX RETURNS FOR THE CALENDAR YEAR ABOVE STATED. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS. Dated: _________________________ _______________________________________ Taxpayer's Signature The undersigned spouse of Taxpayer joins in this election. Dated: _________________________ _______________________________________ Spouse's Signature -2- EX-10.38 8 f76917ex10-38.txt EXHIBIT 10.38 CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. EXHIBIT 10.38 [Caliper Letterhead] August 20, 2001 Dr. Richard D. DiMarchi Group Vice President for Research Technologies and Product Development Eli Lilly and Company Lilly Corporate Center Indianapolis, Indiana 46285 RE: Technology Access Agreement Amendment Dear Dr. DiMarchi: Further to our recent conversations, this Letter Amendment (the "Amendment") sets forth certain changes that the parties wish to make to the Technology Access Agreement by and between Caliper and Lilly dated August 12,1999 (the "Agreement"). Capitalized terms used herein but not defined shall have the meaning ascribed to them in the Agreement. Except as set forth herein, the terms of the Agreement shall remain in full force and effect. The parties acknowledge that the purpose of the Technology Access Program has evolved from its focus on early product development and access to a later-stage commercial relationship. The parties wish to reflect such changes in the Agreement as follows: Lilly shall pay the Annual Subscription Fee for the third Contract Year as set forth in Section 3.1.2 of the Agreement. In consideration of the Annual Subscription Fee, (i) Lilly shall receive Caliper assistance and support of [ * ] FTEs during the third Contract Year, and (ii) Lilly shall have a [ * ] credit towards the purchase of Caliper products and additional support and assistance services (at a rate of [ * ] per FTE per hour) delivered during the third Contract Year. Such purchases shall be made pursuant to Caliper's standard purchase order terms. The requirement in Section 2.3.1 that Caliper support and assistance not exceed [ * ] FTEs in any calendar quarter is hereby waived only to the extent that Lilly purchases additional support and assistance pursuant to the preceding sentence. During the third Contract Year, Lilly will receive a [ * ] discount off of list price for instruments and a [ * ] discount off of list price for datapoints. Lilly shall pay list price for LabChips. Caliper's current product catalog and price list from which Lilly may order products hereunder is attached hereto as Exhibit A. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Please indicate your agreement to the foregoing terms by signing below where indicated. Sincerely, CALIPER TECHNOLOGIES CORP. By: /s/ Michael R. Knapp Ph.D. ------------------------------------- Name: Michael R. Knapp Ph.D. Title: Vice President Corporate Development ACCEPTED AND AGREED: ELI LILLY AND COMPANY By: /s/ Richard D. DiMarchi Ph.D. ------------------------------------- Name: Richard D. DiMarchi Ph.D. Title: Group Vice President, Res. Tech, Product Dev. And Project Mgmt. [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. -----END PRIVACY-ENHANCED MESSAGE-----