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                                  EXHIBIT 10.31

                              EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT, dated as of December 9, 1997, by and between XENOMETRIX,
INC. a Delaware corporation (the "Corporation"), and PAUL J. KOIVUNIEMI (the
"Employee").

                                   WITNESSETH:

WHEREAS, the Corporation desires to employ the Employee and the Employee desires
to be employed by the Corporation as its Vice President of Legal Affairs and
Secretary of the Corporation, all pursuant to the terms and conditions
hereinafter set forth; and

WHEREAS, the Employee recognizes that the Corporation is at this point in its
development dependent upon his capabilities, that its products during its first
years of operation may be few in number and limited in scope, and that the
imposition of the restriction set forth below upon the Employee and other key
employees and advisors may be essential to the success of the Corporation and
the livelihood of the Employee's associates in the Corporation;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, it is agreed as follows:

1.    EMPLOYMENT; DUTIES.

      a)  The Corporation engages and employs the Employee, and the Employee
          hereby accepts engagement and employment, as the Vice President of
          Legal Affairs and Secretary of the Corporation. During the Employment
          Period (as hereinafter defined), the Employee shall have
          responsibility for legal affairs of the Corporation and performing
          such other services and duties, consistent with the office of Vice
          President of Legal Affairs and Secretary of the Corporation, as he may
          from time to time be reasonably requested to perform by the President
          and/or Board of Directors of the Corporation (the "Board"). In
          performing his duties hereunder, the Employee shall report directly to
          the President of the Corporation. If requested by the Corporation and
          duly elected or appointed, the Employee will also serve as a director
          of the Corporation without additional compensation.

      b)  The Employee shall be located within a reasonable distance from
          Boulder, Colorado so as to be able to perform his duties hereunder
          from the Corporation's executive offices which will be located in
          Boulder, Colorado; provided, however, that the Employee acknowledges
          and agrees that the performance by the Employee of this duties
          hereunder may require significant domestic and international travel by
          the Employee.

      c)  During the Employment Period, the Employee shall devote his full time
          and best efforts to the business and affairs of the Corporation.
          Notwithstanding the foregoing, the Employee shall be permitted to
          serve on the board of directors of commercial and charitable
          organization and to make investments which are not related to the
          business and affairs of the Corporation for which he may receive
          compensation, so long as such activities or investments do not
          interfere with the performance of the Employee's duties and
          obligations hereunder. Employee and the Board of Directors will
          periodically review such outside commitments to insure that such
          commitments do not interfere with the Employee's duties with the
          Company.

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2.    TERM.

The term of employment under this Agreement shall be for a period commencing on
December 9, 1997 and continuing through October 5, 1998. The term of employment
referred to in this Section 2, together with any extensions thereof shall be
referred to herein collectively as the "Employment Period".

3.    COMPENSATION AND BENEFITS.

As compensation for the performance of his duties on behalf of the Corporation,
the Employee shall be compensated as follows:

      a)  During the period under this Agreement commencing on December 9, 1997
          and ending on October 5, 1998, the Corporation shall pay or cause to
          be paid to the Employee a base salary at an annual rate of $120,000,
          payable in substantially equal installments in accordance with the
          Corporation's usual practice. The Employee's annual salary for any
          subsequent periods contemplated hereunder, shall be reviewed by the
          Board of Directors not less often than annually and the Board of
          Directors shall grant increases thereof based on the performance of
          the Corporation and the Employee's relative contribution to that
          performance. The annual base salary payable in any year pursuant to
          this Agreement is hereinafter known as the "Annual Salary." Any
          increase in Annual Salary or other compensation shall in no way limit
          or reduce any other obligation of the Corporation hereunder. The
          Corporation shall withhold all applicable federal, state and local
          taxes, social security and workers' compensation contributions and
          such other amounts as may be required by law or agreed upon by the
          parties with respect to the compensation payable to the Employee
          pursuant to this Section 3(a).

      b)  In addition to an Annual Salary, for the fiscal year ending June 30,
          1998, the Employee shall be entitled to receive as incentive
          compensation a cash bonus pursuant to a bonus plan, the terms and
          payment of which shall be mutually agreed upon by the Board of
          Directors and the Employee (the "Bonus Plan").

      c)  The corporation shall reimburse the Employee for all reasonable
          expenses incurred by the Employee in furtherance of the business and
          affairs of the Corporation, including reasonable travel and
          entertainment, against receipt by the Corporation of appropriate
          vouchers or other proof of the Employee's expenditures and otherwise
          in accordance with such policies and procedures as may from to time be
          adopted by the Company.

      d)  The Employee shall be entitled to the number of paid vacation days in
          each calendar year determined by the Corporation from time to time for
          its officers, but not less than two weeks in any calendar year. The
          Employee shall also be entitled to all paid holidays given to the
          Corporation's officers.

      e)  The Corporation shall make available to the Employee and his
          dependents such retirement, life insurance, health insurance and
          disability benefits as the Corporation makes available to its other
          officers.


4.    NON-COMPETITION.

      a)  The Employee understands and recognizes that his services to the
          Corporation are special and unique and agrees that, during the term of
          this Agreement and for a period of two (2) years from the date of
          termination of his employment hereunder, he shall not in any manner,

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          directly or indirectly, on behalf of himself or any person, firm,
          partnership, joint venture, corporation or other business entity (a
          "Person"), enter into or engage in any business competitive with the
          Corporation's business, proposed business or research activities,
          either as an individual for his own account, or as a partner, joint
          venture, executive, agent, consultant, sales or marketing person,
          officer, director of shareholder (other than passive investment of not
          more than five percent (5%) of the outstanding shares of, or any other
          equity interest in, any company or entity listed or traded on a
          national securities exchange or an interest in a partnership for which
          the Employee does not exercise control over investment decisions of
          such partnership) of a Person operating or selling or intending to
          operate or sell in the areas of business and within the product
          markets listed in Schedule 1 attached hereto, within the geographic
          area of the Corporation's business. Schedule I hereto shall be amended
          from time to time upon agreement by the parties hereto to take into
          account additional areas of business and product markets in which the
          Corporation may become engaged.

      b)  During the term of this Agreement and for two (2) years thereafter,
          the Employee shall not, directly or indirectly, without the prior
          written consent of the corporation interfere with the business of the
          Company by soliciting, attempting to solicit, inducing, or otherwise
          causing any employee of the Company to terminate his or her employment
          in order to become an employee, consultant or independent contractor
          to or for any competitor of the Company.

      c)  In the event that the Employee breaches any provisions of this Section
          4 or there is a threatened breach, then, in addition to any other
          rights which the Corporation may have, the Corporation shall be
          entitled, without the posting of a bond or other security, to
          injunctive relief to enforce the restrictions contained herein. In the
          event that an actual proceeding is brought in equity to enforce the
          provisions of this Section 4, the Employee shall not urge as a defense
          that there is an adequate remedy at law nor shall the Corporation be
          prevented from seeking any other remedies which may be available.


5.    TERMINATION.

      a)  DEATH OR RETIREMENT. The Employee's employment hereunder shall
          terminate upon his death or retirement.

      b)  DISABILITY. If, as a result of the Employee's incapacity due to
          physical or mental illness ("Disability"), the Employee shall have
          been absent from his duties hereunder for ninety (90) consecutive
          business days, and within thirty (30) days after written Notice of
          Termination (as hereinafter defined) is given shall not have returned
          to the performance of his duties hereunder on a full-time basis, the
          Corporation may terminate the Employee's employment hereunder.

      c)  CAUSE. The Corporation may terminate the Employee's employment
          hereunder for "Cause". For purposes of this Agreement, "Cause" shall
          mean (i) the willful engaging by the Employee in gross misconduct
          materially injurious to the Corporation, (ii) the willful and material
          violation by the Employee of the provisions of Section 4 hereof or of
          the Proprietary Agreement, or (iii) the willful and material violation
          by the Employee of any provision of this Agreement, other than Section
          4 hereof or of the Proprietary Agreement, which is not cured by the
          Employee within fifteen (15) days after written notice thereof from
          the Corporation. For purposes of this paragraph, no act, or failure to
          act, on the Employee's part shall be considered "willful" unless done,
          or omitted to be done, by him not in good faith and without reasonable
          belief that his action or omission was in the best interest of the
          corporation. Notwithstanding the foregoing, the Employee shall not be
          deemed to have been

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          terminated for Cause unless and until there shall have been delivered
          to the Employee a copy of a resolution, duly adopted by the Board of
          Directors at a meeting of the Board of Directors called and held
          (after five (5) days notice to the Employee of such meeting and an
          opportunity for him, together with his counsel, to be heard before the
          Board of Director at such meeting) for the purposes of finding that in
          the good faith opinion of the Board of Directors, the Employee was
          guilty of conduct set forth above in clauses (i), (ii) or (iii) of
          this Section 5(c).

      d)  CHANGE OF DUTIES. Any assignment to the Employee of duties which are
          inconsistent with the Employee's status as a Vice President of Legal
          Affairs and Secretary of the Corporation or are a substantial
          reduction in the nature or the status of the Employee's
          responsibilities may be treated by him as a termination pursuant to
          Section 5(f) hereof.

      e)  SALE OF ASSETS. In the event of the sale of all or substantially all
          of the Corporation, or a sale of all or substantially all of the
          assets of the Corporation, the Employee may treat his employment as
          having been terminated pursuant to Section 5(f) herein.

      f)  OTHER TERMINATION BY THE CORPORATION. Notwithstanding the foregoing
          provisions, the Corporation may terminate the Employee's employment
          hereunder at any time, subject to the provisions of Section 6(d)
          hereof.

      g)  VOLUNTARY TERMINATION BY THE EMPLOYEE. Notwithstanding the foregoing
          provisions, the Employee may terminate his employment hereunder at any
          time upon three month's written notice to the Corporation, subject to
          the provisions of Section 6(c) hereof.

      h)  NOTICE OF TERMINATION. Any termination by the Corporation pursuant to
          paragraphs (b), (c), or (d) above or by the Employee pursuant to
          paragraph (e) above shall be communicated by a written Notice of
          Termination. For purposes of this Agreement, a "Notice of Termination"
          shall mean a notice which shall indicate the specific termination
          provisions in this Agreement relied upon and shall set forth in
          reasonable detail the facts and circumstances claimed to provide a
          basis for termination of the Employee's employment under the provision
          so indicated.

      i)  DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
          Employee's employment is terminated as a result of the Employee's
          incapacity due to physical or mental illness, thirty (30) days after
          Notice of Termination is duly given (provided that the Employee shall
          not have returned to the performance of his duties on a full-time
          basis during such thirty (30) day period), (ii) the date of the
          Employee's death or retirement, or (iii) if the Employee terminates
          his employment or his employment is terminated for any other reason,
          the date on which a Notice of Termination is duly given.


6.    COMPENSATION UPON TERMINATION OR DURING DISABILITY.

      a)  If the Employee's employment shall be terminated due to death, the
          Employee's estate or other legal representative shall be entitled to
          receive any accrued but unpaid Annual Salary installments and any
          accrued reimbursable expenses (to the extent provided in Section 3(c)
          hereof). In addition, the Employee's estate shall be entitled to
          receive a payment for (i) any accrued but unused vacation days and
          (ii) a pro rata portion of any cash bonus due pursuant to Section 3(b)
          hereof. In the event of Employee's death, rights and benefits of the
          Employee under employee benefit and fringe benefit plans and programs
          of the Corporation will be determined in accordance with the terms and
          provision so such plans and programs.

      b)  During any period that the Employee fails to perform his duties
          hereunder due to Disability, the Employee shall continue to receive
          his full Annual Salary until the Employee's

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          employment is terminated pursuant to Section 5(b) hereof. After
          termination due to Disability, the Employee shall be paid disability
          benefits in accordance with any long term disability plan of the
          Corporation then in effect. In the event of the Employee's disability
          as determined above, rights and benefits of the Employee under
          employee benefit and fringe benefit plans and programs of the
          corporation will be determined in accordance with the terms and
          provisions of such plans and programs.

      c)  If the Employee's employment shall be terminated for Cause or if the
          Employee shall terminate his employment pursuant to Section 5(g)
          hereof, the Corporation shall pay the Employee any accrued but unpaid
          Annual Salary installments and any accrued reimbursable expenses (to
          the extent provided in Section 3(c) hereof) only through the Date of
          Termination and the Corporation shall have no further obligations to
          the Employee under this Agreement. Any rights and benefits the
          Employee may have under employee benefit and fringe benefit plans and
          programs of the corporation will be determined in accordance with the
          terms of such plans and programs.

      d)  If the Employee's employment shall be terminated by the Corporation
          pursuant to Section 5(d), (e) or (f) hereof then the corporation shall
          continue to pay the Employee his regular salary through the date which
          is six (6) months after the Date of Termination; provided, however,
          that the Corporation's obligation to pay such salary shall terminate
          at such time as the Employee commences any alternative full-time
          employment. Notwithstanding the foregoing, the Corporation will only
          be obligated to reimburse the Employee for reimbursable expenses ( to
          the extent provided in Section (c) hereof) accrued through the Date of
          Termination. The Employee shall also be entitled to receive a payment
          for (i) any accrued but unused vacation days and (ii) a pro rata
          portion of any cash bonus due pursuant to Section 3(b) hereof. If the
          Employee's employment shall be terminated by the Corporation pursuant
          to Section 5(d), (e) or (f) hereof, and if the Employee shall be
          ineligible to participate in any of the Corporation's fringe benefit
          plans or arrangements as a result of his ceasing to be an employee of
          the Corporation, then the Corporation shall arrange to provide the
          Employee with substantially equivalent benefits as if he remained
          employed by the Corporation until the earlier of (i) six (6) months or
          (ii) the end of the term of employment referred to in Section 2 hereof
          at no additional expense to the Employee.

      e)  If the Employee's employment is terminated due to retirement, the
          Employee shall be entitled to receive accrued but unpaid Annual Salary
          installments and any accrued reimbursable expenses (to the extent
          provided in Section 3(c) hereof).

7.    NOTICES.

      Any notice or other communication under this Agreement shall be in writing
      and shall be deemed to have been given: (a) when delivered personally
      against receipt therefore; (b) one day after being sent by Federal Express
      or similar overnight delivery; or (c) three days after being mailed
      registered or certified mail, postage prepaid, return receipt requested,
      to the Employee at such address as the Employee shall provide to the
      Corporation or to the Corporation at the following address:

                                    Xenometrix, Inc.
                                    2425 N. 55th Street
                                    Boulder, Co  80301
                                    Attn:  Chief Executive Officer

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      or to such other address or person as either party may have furnished to
      the other in writing in accordance herewith.

8.    RENEWAL OF AGREEMENT.

      Upon expiration of the term of this Agreement, this Agreement may be
      renewed for additional one (1) year periods by the mutual written
      agreement of the parties hereto.

9.    SEVERABILITY OF PROVISIONS.

      If any provision of this Agreement shall be declared by a court of
      competent jurisdiction to be invalid, illegal or incapable of being
      enforced in whole or in part, such provision shall be interpreted so as to
      remain enforceable to the maximum extent permissible consistent with
      applicable law and the remaining conditions and provisions or portions
      thereof shall nevertheless remain in full force and effect and enforceable
      to the extent they are valid, legal and enforceable, and no provision
      shall be deemed dependent upon any other covenant or provision unless so
      expressed herein.

10.   ENTIRE AGREEMENT; MODIFICATION.

      This Agreement contains the entire agreement of the parties relating to
      the subject matter hereof, and the parties hereto have made no agreements,
      representations or warranties relating to the subject matter of this
      Agreement which are not set forth herein. No modification of this
      Agreement shall be valid unless made in writing and signed by the parties
      hereto. This Agreement supersedes any previous terms of employment between
      the Corporation and Employee and any previous employment contractual terms
      are terminated as of the date hereof.

11.   BINDING EFFECT.

      The rights, benefits, duties and obligations under this Agreement shall
      inure to, and be binding upon, the Corporation, its successors and
      assigns, and upon the Employee and his legal representatives. This
      Agreement constitutes a personal service agreement, and the performance of
      the Employee's obligations hereunder may not be transferred or assigned by
      the Employee.

12.   NON-WAIVER.

      The failure of either party to insist upon the strict performance of any
      of the terms, conditions and provisions of this Agreement shall not be
      construed as a waiver or relinquishment of future compliance therewith,
      and said terms, conditions and provisions shall remain in full force and
      effect. No waiver of any term or condition of this Agreement on the part
      of either party shall be effective for any purpose whatsoever unless such
      waiver is in writing and signed by such party.

13.   GOVERNING LAW.

      This Agreement shall be governed by, and construed and interpreted in
      accordance with, the laws of the State of Colorado without regard to
      principles of conflict of laws.

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14.   HEADINGS.

      The headings of paragraphs are inserted for convenience and shall not
      affect any interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
     day and year first above written.

                                        Xenometrix, Inc.



                                        By:   /s/ Stephen J. Sullivan
                                             -----------------------------------
                                        Its:  PRESIDENT AND CEO
                                             -----------------------------------


                                        PAUL J. KOIVUNIEMI

                                         /s/ PAUL J. KOIVUNIEMI
                                        --------------------------------------

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                                   SCHEDULE I



Development, manufacture or sale of gene activity profiling assays, products or
systems, and in vitro and in vivo toxicity, mutagenicity or carcinogenicity
assays, products or systems marketed to the pharmaceutical, biotechnology,
chemical, consumer products and/or environmental companies that test new
chemical entities or test for environmental contaminants.