TerraGen Diversity, Xenova deal

TerraGen will acquire substantially all of the assets of Xenova Discovery Ltd., XEN's drug discovery unit, for up to £5 million ($8.1 million). XEN will receive £1 million in cash in 1999. XEN also will receive 1 million shares of TerraGen class B preferred stock worth £1.5 million, for a 6 percent equity stake. In addition, XEN will receive from TerraGen a £1.5 million convertible loan carrying an interest rate of 1 percent above LIBOR. The note can be converted into TerraGen equity after 24 months, and will convert automatically 36 months after completion of the acquisition. Upon conversion of the note, XEN would own 12 percent of TerraGen. XEN also is entitled to a payment of up to £1 million if TerraGen enters into certain commercial agreements within 16 months of completion. XEN may be required to contribute up to £250,000 in reorganization costs incurred by TerraGen. ...