<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYMYX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 8731 77-0397908
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
SYMYX TECHNOLOGIES, INC.
3100 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(408) 764-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEVEN D. GOLDBY
CHIEF EXECUTIVE OFFICER
SYMYX TECHNOLOGIES, INC.
3100 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(408) 764-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C>
MARIO M. ROSATI, ESQ. STANTON D. WONG, ESQ.
CHRISTOPHER D. MITCHELL, ESQ. JOHN L. DONAHUE, ESQ.
JASON M. BRADY, ESQ. WILLIAM A. HINES, ESQ.
ALEXANDER D. PHILLIPS, ESQ. DAWN C. STEELE, ESQ.
PAUL G. CASTOR, ESQ. BLAIR M. WALTERS, ESQ.
WILSON SONSINI GOODRICH & ROSATI PILLSBURY MADISON & SUTRO LLP
PROFESSIONAL CORPORATION 2550 HANOVER STREET
650 PAGE MILL ROAD PALO ALTO, CALIFORNIA 94304
PALO ALTO, CA 94304 (650) 233-4500
(650) 493-9300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------
Common stock, $0.001 par value... $69,000,000 $19,182.00
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 1999
Shares
LOGO
Common Stock
------------------
Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $ and $ per share. We have made application to list our
common stock on The Nasdaq Stock Market's National Market under the symbol
"SMMX."
The underwriters have an option to purchase a maximum of
additional shares to cover over-allotments of shares.
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 6.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Symyx
--------------- ------------- -----------
<S> <C> <C> <C>
Per Share............................... $ $ $
Total................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about
, 1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
INVEMED ASSOCIATES
SCHRODER & CO. INC.
The date of this prospectus is , 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROSPECTUS SUMMARY.............. 3
RISK FACTORS.................... 6
FORWARD-LOOKING STATEMENTS...... 15
USE OF PROCEEDS................. 15
DIVIDEND POLICY................. 15
CAPITALIZATION.................. 16
DILUTION........................ 17
SELECTED FINANCIAL DATA......... 18
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS.................... 19
BUSINESS........................ 27
</TABLE>
<TABLE>
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PAGE
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<S> <C>
MANAGEMENT...................... 37
RELATED PARTY TRANSACTIONS...... 46
PRINCIPAL STOCKHOLDERS.......... 48
DESCRIPTION OF CAPITAL STOCK.... 51
SHARES ELIGIBLE FOR FUTURE
SALE.......................... 54
UNDERWRITING.................... 56
NOTICE TO CANADIAN RESIDENTS.... 58
LEGAL MATTERS................... 59
EXPERTS......................... 59
ADDITIONAL INFORMATION.......... 59
INDEX TO FINANCIAL STATEMENTS... F-1
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
Symyx(R) is our registered trademark, and Symyx Technologies(TM), Discovery
Tools(TM), Library Studio(TM), PPR(TM), Endeavor(TM) and the Symyx logo are our
trademarks. Other service marks, trademarks and trade names referred to in this
prospectus are the property of their respective owners.
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary highlights information we present more fully
elsewhere in this prospectus. This prospectus contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result
of factors described under the heading "Risk Factors" and elsewhere in this
prospectus.
SYMYX TECHNOLOGIES, INC.
We are a pioneer of high-speed technologies for the discovery of new
materials. Materials and their diverse properties contribute in a vital way to
many of the products we use everyday. Examples include the catalysts used in the
manufacture of major chemicals, plastics and rubbers, the plastics in many of
our household and office goods, the phosphors in computer and television
screens, the pigments and additives in paint and the polymers on the bottom of
sneakers.
The chemical and electronics companies that produce these materials are
facing heightened pressure to achieve growth targets and increase profitability.
These companies are focused on reducing costs, increasing innovation, and
creating new businesses based on proprietary materials. We believe that we can
discover new materials in a more productive and cost-effective manner than by
using traditional methods.
Our proprietary technologies, including instruments, software and methods,
represent complete platforms designed to cost-effectively accelerate materials
discovery and fundamentally change the way materials are discovered. We generate
hundreds to thousands of unique materials at one time and screen those materials
rapidly and automatically for desired properties. This "combinatorial" approach
greatly accelerates the research process. We believe our approach is up to 100
times faster than traditional research methods and reduces the cost per
experiment to as low as 1% of traditional research methods.
We apply our proprietary combinatorial technologies to discover materials
both for ourselves and in collaboration with major companies. Most of these
companies are in the chemical and electronics industries. Our current partners
include Agfa, BASF, Bayer, Celanese, Ciba Specialty Chemicals, Dow Chemical,
Osram OS (an affiliate of Siemens) and Unilever. These partners and other
collaborators have committed a total of over $85 million in near-term research
funding, of which we have received $43 million through June 30, 1999. If a new
material is discovered and commercialized, we generally will receive either
royalties or milestone payments.
We are applying our technology to discover a wide range of materials,
across commodity chemicals and polyolefins, fine chemicals, specialty polymers
and electronic materials. These areas all represent substantial worldwide
markets. For example, in commodity chemicals and polyolefins, our target
catalysts could be applied to the manufacture of products with a worldwide
annual market in excess of $500 billion. In addition to our alliances, we are
seeking to meet the growing demand for combinatorial technologies by offering
selective access to some of our equipment and technologies, including our
Discovery Tools.
Dr. Alejandro Zaffaroni and Dr. Peter Schultz founded Symyx in 1994. Dr.
Zaffaroni is also a founder of ALZA, Affymax, Affymetrix and DNAX Research
Institute. The
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conceptual basis for Symyx draws from Affymax and Affymetrix, which
commercialized the use of high-speed combinatorial methods for pharmaceutical
and genomics research, respectively.
As a pioneer of high-speed materials discovery, we have focused on building
a strong competitive position through both our people and our intellectual
property. We have assembled a diverse technical and scientific team to enable us
to create, validate and apply high-speed discovery technologies. Our team
includes chemists, physicists, engineers and programmers. In addition, we have
filed over 80 patent applications in the United States and more than 110
worldwide, covering combinatorial methodologies, instruments and software and
novel materials.
Our main facility is located at 3100 Central Expressway, Santa Clara, CA
95051 and our telephone number is (408) 764-2000. Our corporate web site is
located at www.symyx.com. Statements and information contained on our web site
are not part of this prospectus. We were incorporated in California in September
1994 and reincorporated in Delaware in February 1999.
THE OFFERING
Common stock offered.............. shares
Common stock to be outstanding
after this offering............... shares
Use of proceeds................... General corporate purposes, including
working capital.
Proposed Nasdaq National Market
symbol.......................... SMMX
Common stock to be outstanding after this offering is based on 23,089,046
shares of common stock outstanding as of June 30, 1999. It does not include:
- 1,668,946 shares subject to stock options outstanding as of June 30,
1999; and
- 1,951,249 shares available for future grant or issuance under our stock
option plans as of June 30, 1999.
Except as otherwise indicated, all of the information in this prospectus:
- reflects the automatic conversion of each outstanding share of preferred
stock into 0.7778 shares of common stock immediately prior to the closing
of this offering;
- reflects a 0.7778-for-1 reverse stock split of our outstanding common
stock that will be effected prior to the closing of this offering; and
- assumes no exercise of the underwriters' over-allotment option.
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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
See Note 1 of Notes to Financial Statements for an explanation of the
method used to determine the number of shares used in computing per share data
below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue............................. $ -- $ 4,806 $13,787 $ 6,383 $14,672
Operating expenses.................. 3,050 10,893 22,258 10,211 15,319
Loss from operations................ (3,050) (6,087) (8,471) (3,828) (647)
Net loss............................ (2,681) (5,596) (8,085) (3,670) (234)
Pro forma basic and diluted net loss
per share......................... $ (0.46) $ (0.01)
Shares used in computing pro forma
basic and diluted net loss per
share............................. 17,737 21,374
</TABLE>
In the "as adjusted" column below, we have adjusted the actual balance
sheet data to give effect to receipt of the net proceeds from the sale in this
offering of shares of common stock at an assumed initial public
offering price of $ per share, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses.
<TABLE>
<CAPTION>
JUNE 30, 1999
----------------------
ACTUAL AS ADJUSTED
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<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and investments................... $42,245
Working capital.......................................... 4,208
Total assets............................................. 60,841
Long-term obligations, net of current portion............ 7,818
Total stockholders' equity............................... 37,844
</TABLE>
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RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. Risks and
uncertainties, in addition to those we describe below, that are not presently
known to us or that we believe are immaterial may also impair our business
operations. If any of the following risks occur, our business could be seriously
harmed. In addition, the trading price of our common stock could decline due to
the occurrence of any of these risks, and you may lose all or part of your
investment.
WE ARE DEPLOYING NEW TECHNOLOGY IN A NEW BUSINESS AND, AS A RESULT, WE MAY NOT
BE ABLE TO ACHIEVE PROFITABILITY
Our combinatorial materials discovery technologies and processes are new
and have not yet been shown to be successful in the discovery of materials that
have been commercialized as products. If we are not able to successfully
discover and commercialize materials, our business and operating results will be
harmed. Discovery and development of new materials is a highly uncertain
process, and we cannot assure you that our discovery process will result in the
identification of development candidates that will be commercialized.
Our ability to succeed is also dependent upon the acceptance by potential
customers of our high throughput screening technology as an effective tool in
the discovery of new materials. Historically, chemical companies have conducted
basic research and discovery activities internally using traditional manual
materials discovery methods. In order for us to achieve our business objectives,
we must convince these companies that our technology and capabilities justify
outsourcing part of their basic research and discovery programs. We may not be
able to keep our existing customers or attract additional customers on
acceptable terms or develop a sustainable, profitable business.
WE ARE DEPENDENT ON THE RESEARCH AND DEVELOPMENT ACTIVITIES OF COMPANIES IN THE
CHEMICAL INDUSTRY, AND INDUSTRY DECLINES OR REDUCTIONS IN RESEARCH AND
DEVELOPMENT ACTIVITIES COULD HARM OUR BUSINESS
The market for our discovery services and instrumentation within the
chemical industry depends on our customers' ability and willingness to invest in
research and development. Substantially all of our revenues are attributable to
our research collaborations. Our future revenues will also be dependent on sales
of Discovery Tools and other instrumentation to chemical companies.
Many companies in the chemical industry have, in the past several years,
experienced declining profitability. In addition, many chemical products have
become commodity products which compete primarily on the basis of price. As a
result, some chemical companies have reduced their research and development
activities. If commoditization of chemical products and other pressures
affecting the industry continue in the future, more companies could adopt
strategies that involve significant reductions in their research and development
programs. Although we believe that our approach can help chemical companies
increase the efficiency of their research and development activities, our
efforts to convince them of this value may be unsuccessful. To the extent that
chemical
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companies reduce their research and development activities, our business and
operating results could be harmed.
WE CANNOT PREDICT THE PACE, QUALITY OR NUMBER OF DISCOVERIES WE MAY GENERATE,
AND ANY INABILITY OF OURS TO GENERATE A SIGNIFICANT NUMBER OF DISCOVERIES WOULD
HARM OUR BUSINESS
Our future revenues and profitability are dependent upon our ability to
achieve discoveries. Because of the inherently uncertain nature of research
activities, we cannot predict with a high level of precision the pace with which
we may generate discoveries or the quality of any discoveries that we may
generate. If we are unable to generate the number of discoveries that we would
expect to generate from a given number of experiments or our development
candidates do not result in products having the commercial potential we or our
collaborators anticipate, the future revenues from our research collaborations
and from commercialization of products would be adversely affected. In addition,
our existing and potential new customers may become reluctant to renew or enter
into new agreements with us. As a result, our failure to generate discoveries
and development candidates that are successfully commercialized would harm our
business and operating results.
WE ARE DEPENDENT ON OUR COLLABORATIONS WITH MAJOR COMPANIES, AND THE FAILURE OF
OUR COLLABORATIVE PARTNERS TO SUCCESSFULLY COMMERCIALIZE PRODUCTS WOULD HARM OUR
BUSINESS
To date, substantially all of our revenues have come from collaborative
arrangements with chemical and electronics companies. These contracts expire
after a fixed period of time. If they are not renewed or if we do not enter into
new collaborative arrangements, our business and operating results will be
harmed. For example, our contracts with the B.F. Goodrich Company and Hoechst AG
were terminated by mutual agreement as these companies shifted their business
away from chemicals.
For us to achieve and sustain a significant level of profitability, we must
achieve discoveries with significant commercial potential, and our collaborators
must successfully commercialize products based on our discoveries. We will not
receive royalties on sales of products by our collaborators until the
collaborator has commenced commercial sales of a product resulting from the
collaboration. We are dependent upon our collaborative partners to successfully
commercialize products resulting from our collaborations. The failure of our
partners to commercialize development candidates resulting from our research
efforts would harm our business and operating results.
WE INTEND TO CONDUCT PROPRIETARY RESEARCH PROGRAMS, AND ANY CONFLICTS WITH OUR
COLLABORATORS OR ANY INABILITY TO COMMERCIALIZE DEVELOPMENT CANDIDATES RESULTING
FROM THIS RESEARCH WOULD HARM OUR BUSINESS
Our strategy involves conducting proprietary research programs. These
programs are focused on discovery of products for specialty markets that have
fewer barriers to entry for an emerging company. We believe that this
differentiation of focus will enable us to minimize conflicts with our
collaborators relating to rights to potentially overlapping leads developed
through our proprietary programs and through programs funded by a collaborator.
However, in the event any conflict of this nature were to arise, our business
could be harmed.
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In addition, we will either commercialize development candidates resulting
from our proprietary programs directly or through licensing to other companies.
In order for us to commercialize these development candidates directly, we would
need to develop, or obtain through outsourcing arrangements, the capability to
manufacture, market and sell chemical products. We do not have this capability,
and we may not be able to develop or otherwise obtain the requisite
manufacturing, marketing and sales capabilities. If we are unable to
successfully commercialize products resulting from our proprietary research
efforts, our business and operating results would be harmed.
WE HAVE NOT SOLD ANY DISCOVERY TOOLS SYSTEMS, AND WE CANNOT ASSURE YOU THAT WE
WILL BE ABLE TO BUILD A SUSTAINABLE BUSINESS RELATED TO THE SALE OF THESE
SYSTEMS
We have not sold any of our Discovery Tools systems. Because of the high
cost and complexity of these systems, the sales cycle for them is likely to be
long. Sales of these systems will require us to educate our potential customers
about the full benefits of these systems, which may require significant time.
Due to these factors, sales of Discovery Tools systems will be subject to a
number of significant risks over which we have little or no control, including:
- customers' budgetary constraints and internal acceptance review
procedures;
- the timing of budget cycles; and
- potential downturns in general or in industry specific economic
conditions.
If the cycle for Discovery Tools systems lengthens unexpectedly, it could
adversely affect the timing of our revenues.
In addition, in order to successfully market and sell these systems, we
will need to develop the capability to manufacture, market and sell large
capital equipment items. Although we have several business development
professionals with experience in this area, we may need to hire additional
personnel. We may not be able to sell these systems and we may not be able to
build a sustainable business related to the sale of these systems. If we are not
able to build our Discovery Tools business, our business and our future
operating results would be harmed.
WE ARE COMMERCIALIZING OUR MANUAL BENCH INSTRUMENTS THROUGH A THIRD PARTY
ARRANGEMENT, AND IF THIS THIRD PARTY DOES NOT PERFORM EFFECTIVELY, OUR ABILITY
TO GENERATE REVENUE FROM THE SALE OF THESE PRODUCTS WILL BE HARMED
We intend to commercialize our manual bench instruments through our
relationship with Argonaut Technologies. Therefore, although the commercial
success of these instruments will depend on their features and price as compared
to competing products and on their ability to achieve market acceptance, our
ability to realize significant commercial sales of these instruments will also
depend on the efforts of Argonaut in promoting, marketing and selling these
instruments. Argonaut's efforts in this regard will be outside of our control.
Accordingly, to the extent that Argonaut fails to effectively promote, market
and sell our manual instruments, our revenues from the sales of these
instruments, and therefore our operating results, would be harmed.
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WE EXPECT THAT OUR QUARTERLY RESULTS OF OPERATIONS WILL FLUCTUATE, AND THIS
FLUCTUATION COULD CAUSE OUR STOCK PRICE TO DECLINE, CAUSING INVESTOR LOSSES
Our quarterly operating results have fluctuated in the past and are likely
to do so in the future. These fluctuations could cause our stock price to
fluctuate significantly or decline. Some of the factors which could cause our
operating results to fluctuate include:
- expiration of research contracts with major chemical companies, which may
not be renewed or replaced with contracts with other companies;
- the success rate of our discovery efforts associated with milestones and
royalties;
- the timing and willingness of partners to commercialize our discoveries
which would result in royalties;
- the size and timing of customer orders for, and shipments of, Discovery
Tools instrumentation; and
- general and industry specific economic conditions, which may affect our
customers' capital investment levels.
A large portion of our expenses, including expenses for facilities,
equipment and personnel, are relatively fixed in nature. Accordingly, in the
event revenues decline or do not grow as anticipated due to expiration of
research contracts, failure to obtain new contracts or other factors, we may not
be able to correspondingly reduce our operating expenses. In addition, we plan
to significantly increase operating expenses in 2000. Failure to achieve
anticipated levels of revenues could therefore significantly harm our operating
results for a particular fiscal period.
Due to the possibility of fluctuations in our revenues and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. Our operating results in some
quarters may not meet the expectations of stock market analysts and investors.
In that case, our stock price would probably decline.
THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS
We believe our future success will depend upon our ability to attract and
retain highly skilled personnel, including W. Henry Weinberg, our Senior Vice
President and Chief Technical Officer, and other key scientific and managerial
personnel. We do not have any key-person life insurance relating to our key
personnel. These employees are at-will and not subject to employment contracts.
We may not be successful in attracting and retaining key personnel in the
future.
As we seek to expand our operations, the hiring of qualified scientific and
technical personnel will be difficult due to the limited number of qualified
professionals. Competition for these types of employees is intense. We have in
the past experienced difficulty in recruiting qualified personnel. Failure to
attract and retain personnel, particularly scientific and technical personnel,
would harm our business and operating results.
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COMPETITION COULD INCREASE, AND COMPETITIVE DEVELOPMENTS COULD RENDER OUR
TECHNOLOGIES OBSOLETE OR NONCOMPETITIVE, WHICH WOULD HARM OUR BUSINESS
The field of combinatorial materials science is increasingly competitive.
We are aware of several companies that are applying their expertise in
combinatorial chemistry to materials research and development. These companies
include Aperion LLC, a joint venture between CombiChem, Inc. and Catalytica,
Inc., and Cambridge Combinatorial Limited, an affiliate of Oxford Molecular PLC.
We are also aware of some chemical companies that have internal combinatorial
programs. In addition, Shell Chemicals is participating in a consortium in The
Netherlands and BASF is funding a new start-up company in Heidelberg, Germany
named HTE. BASF is also one of our collaborative partners. In addition, academic
and research institutions may seek to develop technologies that would be
competitive with our systems for materials discovery. Because combinatorial
materials science is an emerging field, competition from additional entrants may
increase.
Many of our current and potential competitors have greater financial,
manufacturing, marketing and sales resources than we do. Our competitors could
develop technologies and methods for materials research and discovery that
render our technologies and systems obsolete or less competitive. Any
competitive developments of this nature would harm our business and operating
results.
ANY INABILITY OF OURS TO KEEP PACE WITH TECHNOLOGICAL ADVANCES AND EVOLVING
INDUSTRY STANDARDS WOULD HARM OUR BUSINESS
The market for our products is characterized by continuing technological
development, evolving industry standards and changing customer requirements. The
introduction of products by our direct competitors or others embodying new
technologies, the emergence of new industry standards or changes in customer
requirements could render our existing products obsolete, unmarketable or less
competitive. Our success depends upon our ability to enhance existing products
and services and to respond to changing customer requirements. Failure to
develop and introduce new products and services, or enhancements to existing
products, in a timely manner in response to changing market conditions or
customer requirements will harm our business and operating results.
OUR INABILITY TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGY COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS
The success of our business depends on our ability to protect our
intellectual property portfolio and obtain patents without infringing the
proprietary rights of others. If we do not effectively protect our intellectual
property, our business and operating results could be harmed.
Patents may not issue from our applications. Even if we are able to obtain
patents covering our technology, the patents may be challenged, circumvented,
invalidated or unenforceable. Competitors may develop similar technology or
design around any patents issued to us or our other intellectual property
rights. Our competitors would then be able to offer research services and
develop, manufacture and sell products which compete directly with our research
services and products. In that case, our business and operating results would be
harmed. We also seek to protect our technology and processes in part by
confidentiality agreements with our collaborators, employees and consultants.
However, these agreements might be breached, and in that event, we might not
have adequate
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remedies for the breach. Further, our trade secrets might otherwise become known
or be independently discovered by competitors.
LITIGATION OR OTHER PROCEEDINGS OR THIRD PARTY CLAIMS OF INFRINGEMENT COULD
REQUIRE US TO SPEND TIME AND MONEY AND COULD SHUT DOWN SOME OF OUR OPERATIONS
If we became involved in litigation or interference proceedings declared by
the United States Patent and Trademark Office, or oppositions or other
intellectual property proceedings outside of the United States, to defend our
intellectual property rights or as the result of alleged infringement of the
rights of others, we might have to spend significant amounts of money. The
litigation or proceedings could divert our management's time and efforts. An
adverse ruling, including an adverse decision as to the priority of our
inventions, would undercut or invalidate our intellectual property position and
could subject us to significant liability for damages, prevent us from using or
marketing systems, processes or products and have a negative impact on our
business and operating results. Even unsuccessful claims could result in
significant legal fees and other expenses, diversion of management's time and
disruptions in our business. Uncertainties resulting from the initiation and
continuation of any patent or related litigation could harm our ability to
compete, pending resolution of the disputed matter.
We received a communication dated in December 1998 from a company claiming
that our activities may infringe one or more patents held by that company. We
responded in writing to this claim in February 1999 and indicated that we did
not believe we were infringing any of the company's patents. We have not
received any further communications from this company. We may receive
communications from this company or others in the future asserting that our
business or technologies infringe their intellectual property rights.
We may be required to obtain licenses to patents or other proprietary
rights held by others. However, these licenses might not be available on
acceptable terms, or at all. In that event, we could encounter delays in system,
process or product introductions while we attempt to design around the patents.
Our redesigned systems, processes or products may be inferior to our original
designs or we may be unable to continue system, process or product development
in the particular field. In either case, our competitive position, business and
operating results would likely suffer.
WE USE HAZARDOUS MATERIALS IN OUR BUSINESS, AND ANY CLAIMS RELATING TO IMPROPER
HANDLING, STORAGE OR DISPOSAL OF THESE MATERIALS COULD HARM OUR BUSINESS OR OUR
OPERATING RESULTS
Our business involves the use of a broad range of hazardous chemicals and
materials. Environmental laws impose stringent civil and criminal penalties for
improper handling, disposal and storage of these materials. In addition, in the
event of an improper or unauthorized release of, or exposure of individuals to,
hazardous materials, we could be subject to civil damages due to personal injury
or property damage caused by the release or exposure. A failure to comply with
environmental laws could result in fines and the revocation of environmental
permits, which could prevent us from conducting our business. Accordingly, any
violation of environmental laws or failure to properly handle, store or dispose
of hazardous materials could harm our business and operating results.
11
<PAGE> 13
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS
We have experienced a period of rapid and substantial growth that has
placed and, if such growth continues, will continue to place a strain on our
administrative and operational infrastructure. If we are unable to manage this
growth effectively, our business, results of operations or financial condition
may be materially adversely affected. We increased the number of our employees
from 28 at December 31, 1996 to 130 at June 30, 1999. Our revenues increased
from $4.8 million in 1997 to $13.8 million in 1998 and $14.7 million for the six
months ended June 30, 1999. Our ability to manage our operations and growth
effectively requires us to continue to improve our operational, financial and
management controls, reporting systems and procedures and hiring programs. We
may not be able to successfully implement improvements to our management
information and control systems in an efficient or timely manner and may
discover deficiencies in existing systems and controls.
YEAR 2000 ISSUES COULD NEGATIVELY AFFECT OUR BUSINESS
If we, our customers, our providers of hardware and software, or our
third-party computer network providers fail to remedy any Year 2000 issues, the
reasonably likely worst case scenario would be the interruption of our research
programs, which could harm our business and operating results. Presently we are
unable to quantitatively estimate the duration and extent of any such
interruption, or estimate the effect such interruption may have on our future
revenue.
We cannot assure you that, despite our current assessments of the Year 2000
problems that may affect our business, we will be able to identify and correct
all Year 2000 problems on a timely basis. Similarly, we cannot assure you that
unknown or unanticipated Year 2000 issues will not arise. Accordingly, Year 2000
compliance efforts may involve significant time and expense and the occurrence
of unknown, unanticipated or unremediated Year 2000 problems could harm our
business and operating results. We currently have no contingency plans to
address the risks associated with unremediated Year 2000 problems.
SOME OF OUR EXISTING STOCKHOLDERS CAN EXERT CONTROL OVER US, AND MAY NOT MAKE
DECISIONS THAT ARE IN THE BEST INTERESTS OF ALL STOCKHOLDERS
After this offering, our officers, directors and principal stockholders
(greater than 5% stockholders) will together control approximately % of our
outstanding common stock. As a result, these stockholders, if they act together,
will be able to exert a significant degree of influence over our management and
affairs and over matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions. This
concentration of ownership may have the effect of delaying or preventing a
change in control of Symyx and might affect the market price of our common
stock, even when such a change may be in the best interests of all stockholders.
OUR STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY
Prior to this offering, there has been no public market for shares of our
common stock. An active public trading market may not develop following
completion of this offering or, if developed, may not be sustained. The initial
public offering price of the
12
<PAGE> 14
shares of common stock will be determined by negotiation between us and
representatives of the underwriters. This price will not necessarily reflect the
market price of the common stock following this offering. See "Underwriting" for
a discussion of the factors to be considered in determining the initial public
offering price.
The market price for the common stock following this offering will be
affected by a number of factors, including the following:
- the announcement of new products or services by us or our competitors;
- quarterly variations in our or our competitors' results of operations;
- failure to achieve operating results projected by securities analysts;
- changes in earnings estimates or recommendations by securities analysts;
- developments in our industry; and
- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors.
These factors and fluctuations, as well as general economic, political and
market conditions, may materially adversely affect the market price of our
common stock.
OUR FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND THE OCCURRENCE
OF AN EARTHQUAKE OR OTHER CATASTROPHIC DISASTER COULD CAUSE DAMAGE TO OUR
FACILITIES AND EQUIPMENT AND HARM OUR BUSINESS
Our facilities are located in the Silicon Valley near known earthquake
fault zones and are vulnerable to damage from earthquakes. We are also
vulnerable to damage from other types of disasters, including fire, floods,
power loss, communications failures and similar events. If any disaster were to
occur, our ability to operate our business at our facilities would be seriously,
or potentially completely, impaired. In addition, the unique nature of our
research activities and of much of our equipment could make it difficult for us
to recover from a disaster. The insurance we maintain may not be adequate to
cover our losses resulting from disasters or other business interruptions.
Accordingly, an earthquake or other disaster could harm our business and
operating results.
POTENTIAL SALES OF SHARES ELIGIBLE FOR FUTURE SALE AFTER THIS OFFERING COULD
CAUSE OUR STOCK PRICE TO DECLINE
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. These sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate. The shares sold in this offering will be freely tradable
immediately upon completion of this offering. In addition, on the 181st day
after completion of this offering, a large number of shares held by existing
stockholders will be freely tradable. Sales of these shares could cause the
market price of our common stock to decline.
13
<PAGE> 15
PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN OUR CONTROL, EVEN IF THIS WOULD BE BENEFICIAL TO
STOCKHOLDERS
Provisions of our amended and restated certificate of incorporation, bylaws
and Delaware law could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders. These provisions
include:
- A classified board of directors, in which our board is divided into three
classes with three year terms with only one class elected at each annual
meeting of stockholders, which means that a holder of a majority of our
common stock will need two annual meetings of stockholders to gain
control of the board;
- A provision which prohibits our stockholders from acting by written
consent without a meeting;
- A provision which permits only the board of directors, the president or
the chairman to call special meetings of stockholders; and
- A provision which requires advance notice of items of business to be
brought before stockholders meetings.
These provisions can be amended only with the vote of the holders of
66 2/3% of our outstanding capital stock.
AS A NEW INVESTOR, YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION
If you purchase shares of our common stock in this offering, you will incur
immediate and substantial dilution in pro forma net tangible book value. If the
holders of outstanding options or warrants exercise those options or warrants,
you will incur further dilution. See "Dilution."
WE HAVE BROAD DISCRETION IN THE USE OF PROCEEDS FROM THIS OFFERING
Our management will have considerable discretion in the application of the
net proceeds, and you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used appropriately. The net
proceeds may be used for corporate purposes that do not increase our
profitability or our market value. Pending application of the proceeds, they may
be placed in investments that do not produce interest income or that lose value.
WE DO NOT INTEND TO PAY CASH DIVIDENDS
We have not paid cash dividends since our inception and do not intend to
pay cash dividends in the foreseeable future.
14
<PAGE> 16
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
the federal securities laws that relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "intend," "potential" or "continue" or the
negative of such terms or other comparable terminology. In addition, these
forward-looking statements include, but are not limited to, statements regarding
the following: (1) our combinatorial materials discovery technologies and
processes, (2) our ability to realize commercially valuable discoveries in our
collaborations with chemical and electronics companies and in our proprietary
programs, (3) our plans to develop our Discovery Tools and instrumentation
businesses, (4) our intellectual property portfolio and (5) our business
strategies and plans. These statements are only predictions.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus or to conform these statements to actual results.
USE OF PROCEEDS
We expect to receive net proceeds of approximately $54.8 million from the
sale of the shares of common stock, at an assumed initial public
offering price of $ per share, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses. If the underwriters'
over-allotment option is exercised in full, our estimated net proceeds will be
$63.2 million.
We expect to use the net proceeds from this offering for general corporate
purposes, including working capital and research and development activities.
Pending use of the net proceeds of this offering, we intend to invest the net
proceeds in interest-bearing, investment-grade securities.
A portion of the net proceeds may be used to acquire or invest in
complementary businesses or products or to obtain the right to use complementary
technologies. From time to time, in the ordinary course of business, we may
evaluate potential acquisitions of these businesses, products or technologies.
We have no current plans, agreements or commitments, and are not currently
engaged in any negotiations regarding any such transaction.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, to support the development
of our business and do not anticipate paying any cash dividends in the
foreseeable future.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth:
- the actual capitalization of Symyx at June 30, 1999;
- the pro forma capitalization of Symyx after giving effect to the
conversion of all outstanding shares of our preferred stock into
15,991,849 shares of common stock effective automatically immediately
prior to the closing of this offering; and
- the pro forma as adjusted capitalization after giving effect to the sale
of shares of common stock in this offering at an assumed
initial public offering price of $ per share and the application of
the net proceeds, after deducting estimated underwriting discounts and
commissions and estimated offering expenses.
You should read this table in conjunction with our financial statements and
the related notes and Selected Financial Data included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATA)
<S> <C> <C> <C>
Long-term obligations.................................... $ 7,818 $ 7,818 $ 7,818
Stockholders' equity:
Preferred stock, $0.001 par value, 23,650,000 shares
authorized, issuable in series:........................
Series A convertible, 1,000,000 shares designated,
issued and outstanding, (no shares outstanding pro
forma or pro forma as adjusted)..................... 1 -- --
Series B convertible, 8,650,000 shares designated,
8,600,687 shares issued and outstanding, (no shares
outstanding pro forma or pro forma as adjusted)..... 9 -- --
Series C convertible, 8,000,000 shares designated,
6,750,284 shares issued and outstanding, (no shares
outstanding pro forma or pro forma as adjusted)..... 7 -- --
Series D convertible, 6,000,000 shares designated,
4,210,185 shares issued and outstanding, (no shares
outstanding pro forma or pro forma as adjusted)..... 4 -- --
Common stock, $0.001 par value, 50,000,000 shares
authorized, 7,097,197 shares issued and outstanding
(23,089,046 shares outstanding pro forma and
shares outstanding pro forma as adjusted).............. 7 23
Additional paid-in capital............................... 57,672 57,677
Stockholder notes receivable............................. (750) (750) (750)
Deferred stock compensation.............................. (1,879) (1,879) (1,879)
Unrealized gain (loss) on investments.................... (123) (123) (123)
Accumulated deficit...................................... (17,104) (17,104) (17,104)
-------- -------- --------
Total stockholders' equity..................... 37,844 37,844
-------- -------- --------
Total capitalization........................... $ 45,662 $ 45,662 $
======== ======== ========
</TABLE>
This table excludes the following shares:
- 1,668,946 shares subject to stock options outstanding as of June 30,
1999; and
- 1,951,249 shares reserved for issuance under our stock option plans as of
June 30, 1999.
For additional information regarding these shares, see Note 4 of Notes to
Financial Statements.
16
<PAGE> 18
DILUTION
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering.
The pro forma net tangible book value of Symyx at June 30, 1999, was $37.8
million, or $1.64 per share of common stock. Pro forma net tangible book value
per share represents total tangible assets less total liabilities, divided by
the number of outstanding shares of common stock after giving effect to the
conversion of all outstanding shares of our preferred stock into 15,991,849
shares of common stock effective automatically immediately prior to the closing
of this offering. After giving effect to the sale of the shares
of common stock at an assumed initial public offering price of $ per share,
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses, our pro forma as adjusted net tangible book value
at June 30, 1999, would be $ or $ per share. This represents an
immediate increase in the pro forma as adjusted net tangible book value of
$ per share to existing stockholders and an immediate dilution of $ per
share to new investors, or approximately % of the assumed offering price of
$ per share. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price per share..................... $
Pro forma net tangible book value per share at June 30,
1999.................................................. $1.64
Increase per share attributable to this offering.......
-----
Pro forma net tangible book value per share after this
offering
------
Dilution per share to new investors......................... $
======
</TABLE>
The following table shows on a pro forma as adjusted basis at June 30,
1999, after giving effect to the sale of the shares of common
stock at an assumed initial public offering price of $ per share, before
deducting estimated underwriting discounts and commissions and estimated
offering expenses, and conversion of all preferred stock into common stock for
the number of shares of common stock purchased from us, the total consideration
paid to us and the average price paid per share by existing stockholders and by
new investors purchasing common stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders..... 23,089,046 $54,015,450 $2.34
New investors.............
Total...........
</TABLE>
The computations in the table above assume no exercise of any stock options
outstanding at June 30, 1999. As of June 30, 1999, there were options
outstanding to purchase a total of 1,668,946 shares of common stock at a
weighted average exercise price of $1.08 per share. If any of these options are
exercised, there will be further dilution to new public investors.
17
<PAGE> 19
SELECTED FINANCIAL DATA
The statement of operations data for the years ended December 31, 1996,
1997 and 1998, and the balance sheet data as of December 31, 1997 and 1998 are
derived from our financial statements, which have been audited by Ernst & Young
LLP, independent auditors and are included elsewhere in this prospectus. The
statement of operations data for the period from inception through December 31,
1995 and the balance sheet data as of December 31, 1995 and 1996 are derived
from audited financial statements not included in this prospectus. The financial
data as of June 30, 1999 and for the six months ended June 30, 1998 and 1999 are
derived from unaudited financial statements included elsewhere in this
prospectus. We have prepared this unaudited information on the same basis as the
audited financial statements and have included all adjustments, consisting only
of normal recurring adjustments, that we consider necessary for a fair
presentation of our financial position and operating results for such periods.
When you read this selected financial data, it is important that you also read
the historical financial statements and related notes included in this
prospectus, as well as the section of this prospectus related to "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Historical results are not necessarily indicative of future results. See Note 1
of Notes to Financial Statements for an explanation of the method used to
determine the number of shares used in computing pro forma net loss per share.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
PERIOD FROM INCEPTION YEAR ENDED DECEMBER 31, JUNE 30,
(SEPTEMBER 20, 1994) TO --------------------------- -----------------
DECEMBER 31, 1995 1996 1997 1998 1998 1999
----------------------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue from collaborations........... $ -- $ -- $ 4,806 $13,787 $ 6,383 $14,672
Operating expenses:
Research and development............ 27 2,483 8,764 17,640 7,938 10,634
General and administrative.......... 481 567 2,129 4,501 2,273 2,997
Amortization of deferred
compensation...................... -- -- -- 117 -- 1,688
------ ------- ------- ------- ------- -------
Total operating expenses.......... 508 3,050 10,893 22,258 10,211 15,319
------ ------- ------- ------- ------- -------
Loss from operations.................. (508) (3,050) (6,087) (8,471) (3,828) (647)
Interest income....................... -- 375 843 1,117 536 962
Interest and other expense............ -- (6) (352) (731) (378) (549)
------ ------- ------- ------- ------- -------
Net loss.............................. $ (508) $(2,681) $(5,596) (8,085) $(3,670) $ (234)
====== ======= ======= ======= ======= =======
Basic and diluted net loss per
share............................... $(0.40) $ (1.24) $ (1.97) $ (2.11) $ (1.04) $ (0.04)
====== ======= ======= ======= ======= =======
Shares used in computing basic and
diluted net loss per share.......... 1,269 2,168 2,845 3,829 3,524 5,382
====== ======= ======= ======= ======= =======
Pro forma basic and diluted net loss
per share........................... $ (0.46) $ (0.01)
======= =======
Shares used in computing pro forma
basic and diluted net loss per
share............................... 17,737 21,374
======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------ JUNE 30,
1995 1996 1997 1998 1999
------ ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and investments...................... $ 15 $ 9,349 $20,614 $35,121 $42,245
Working capital (deficit)................................... (510) 8,789 9,860 15,701 4,208
Total assets................................................ 19 10,674 34,861 52,903 60,841
Long-term obligations, net of current portion............... -- -- 4,455 7,592 7,818
Total stockholders' equity.................................. (506) 10,283 25,030 36,166 37,844
</TABLE>
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements based upon current
expectations that involve risks and uncertainties. When used in this prospectus,
the words "intend," "anticipate," "believe," "estimate," "plan" and "expect" and
similar expressions are included to identify forward-looking statements. Our
actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including those set forth under "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
Symyx was founded in September 1994 and began significant operations in
April 1996. To date, our revenues and cash flow have come from research
collaborations with large chemical and electronics companies and government
grants. Our current corporate partners are Agfa-Gevaert N.V., BASF AG, Bayer AG,
Celanese Ltd., Ciba Specialty Chemicals, Inc., The Dow Chemical Company, Osram
Opto Semiconductors GmbH & Co. OHG and Unilever UK Central Resources Ltd.
We have invested heavily in establishing the technology, instrumentation
and informatics necessary to pursue high throughput discovery for proprietary
materials. These materials include:
- catalysts for commodity chemicals and polyolefins;
- catalysts for fine chemicals;
- specialty polymers; and
- electronic materials.
These investments contributed to revenue increases from no revenue in
fiscal 1996 to $4.8 million in fiscal 1997 to $13.8 million in fiscal 1998.
Operating expenses increased from $3.1 million in fiscal 1996 to $10.9 million
in fiscal 1997 to $22.3 million in fiscal 1998. Our total headcount increased
from 28 employees at the end of fiscal 1996 to 76 employees at the end of fiscal
1997 to 108 employees at the end of fiscal 1998 and to 130 employees at June 30,
1999.
We expect to continue to make significant investments in research and
development, including the development of new instruments and software, to
enhance our technologies. In addition, an important part of our strategy is to
expand our operations and employee base, and to build our resources for research
and development, business development and marketing.
We have incurred significant losses since our inception. As of June 30,
1999, our accumulated deficit was approximately $17.1 million. We expect to
incur additional operating losses over at least the next year as we continue to
expand our research and development efforts and infrastructure.
SOURCE OF REVENUES AND REVENUE RECOGNITION POLICY
We recognize revenues from research collaboration agreements and government
grants as earned upon achievement of the performance requirements of the
agreements and grants. Payments received which are related to future performance
are deferred and
19
<PAGE> 21
recognized as revenue as the performance requirements are achieved. As of June
30, 1999, we have deferred revenues of approximately $10.1 million. The terms of
our collaboration agreements generally require us to perform minimum levels of
research. Our sources of potential revenue for the next several years are likely
to be:
- payments under existing and possible future collaborative arrangements;
- government research grants;
- royalties from our partners based on revenues received from any products
commercialized under those agreements;
- sales of Discovery Tools and other instruments; and
- sales of any products discovered in our internal research programs.
See Note 2 of Notes to Financial Statements.
DEFERRED COMPENSATION
Deferred compensation for options granted to employees has been determined
as the difference between the deemed fair market value of our common stock on
the date options were granted and the exercise price. Deferred compensation for
options granted to consultants has been determined in accordance with Statement
of Financial Accounting Standards No. 123 as the fair value of the equity
instruments issued. Deferred compensation for options granted to consultants is
periodically remeasured as the underlying options vest.
In connection with the grant of stock options to employees and consultants,
we recorded deferred stock compensation of approximately $3.1 million in the six
month period ended June 30, 1999 and $560,000 in the fiscal year ended December
31, 1998. These amounts were initially recorded as a component of stockholders'
equity and are being amortized by charges to operations over the vesting period
of the options. We recorded amortization of deferred compensation of
approximately $1.7 million for the six months ended June 30, 1999 and $117,000
in fiscal 1998. The amortization expense relates to options awarded to employees
and consultants in all operating expense categories. See Note 4 of Notes to
Financial Statements. We anticipate recording additional deferred stock
compensation expense of approximately $1.8 million for the three months ending
September 30, 1999.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1999
Revenues
Our total revenues increased 130% from $6.4 million for the six months
ended June 30, 1998 to $14.7 million for the six months ended June 30, 1999.
This increase was due primarily to the addition of new research collaborations
and the expansion of existing government grants. Bayer, Celanese and The Dow
Chemical Company accounted for 38%, 44% and none of total revenue for the six
months ended June 30, 1998, and 32%, 12% and 19% of revenue for the six months
ended June 30, 1999, respectively. B.F. Goodrich accounted for 13% of revenue
for the six months ended June 30, 1998. Our collaboration with B.F. Goodrich
terminated by mutual agreement after B.F. Goodrich merged with another company
and changed its business focus from chemicals to aerospace. B.F. Goodrich has
returned to us all intellectual property that was the subject of the
20
<PAGE> 22
collaboration agreement and will continue to make the required payments under
the collaboration agreement through December 31, 1999.
Research and Development Expenses
Our research and development expenses consist primarily of:
- salaries and other personnel-related expenses;
- facility costs;
- supplies; and
- depreciation of facilities and laboratory equipment.
Research and development expenses increased 34% from $7.9 million for the
six months ended June 30, 1998 to $10.6 million for the six months ended June
30, 1999. The increase was due primarily to an increase in salaries and other
personnel costs to support our additional collaborative and internal research
efforts.
Research and development expenses represented 124% of total revenues for
the six months ended June 30, 1998 and 72% of total revenues for the six months
ended June 30, 1999. The decrease as a percentage of total revenues was due
primarily to the growth in our total revenues. Our core business is research and
development. Accordingly, we expect to continue to devote substantial resources
to research and development, and we expect that research and development
expenses will continue to increase in absolute dollars.
General and Administrative Expenses
Our general and administrative expenses consist primarily of personnel
costs for finance, human resources, business development, legal and general
management, as well as professional expenses, such as legal and accounting.
General and administrative expenses increased 32% from $2.3 million for the six
months ended June 30, 1998 to $3.0 million for the six months ended June 30,
1999. Expenses increased primarily due to increased staffing necessary to manage
and support our growth.
General and administrative expenses represented 36% of total revenues for
the six months ended June 30, 1998 and 20% of total revenues for the six months
ended June 30, 1999. The decrease as a percentage of our total revenues was due
primarily to the growth in our total revenues. We expect that our general and
administrative expenses will increase in absolute dollar amounts as we:
- expand our business development staff;
- add infrastructure; and
- incur additional costs related to being a public company, including
directors' and officers' insurance, investor relations programs and
increased professional fees.
Net Interest Income (Expense)
Net interest income (expense) represents interest income earned on our cash
and cash equivalents net of interest expense on equipment financing loans.
Interest income increased from $536,000 for the six months ended June 30, 1998
to $962,000 for the six months ended June 30, 1999. This increase was due to
higher average cash balances. Interest expense increased from $378,000 for the
six months ended June 30, 1998
21
<PAGE> 23
to $549,000 for the six months ended June 30, 1999. This increase was due to
additional equipment financing loans used to partially fund our acquisition of
equipment.
Provision for Income Taxes
We incurred net operating losses in the six months ended June 30, 1998 and
1999, and consequently we did not pay any federal, state or foreign income
taxes.
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Revenues
We did not have any revenues in fiscal 1996. Our total revenues for fiscal
1997 were $4.8 million and our total revenues for fiscal 1998 were $13.8
million. The increase in each of these periods was due primarily to the addition
of new research collaborations. Bayer, Hoechst, including its wholly-owned
subsidiary Celanese, and B.F. Goodrich accounted for 22%, 76% and 1% of revenue
in fiscal 1997 and 38%, 35% and 12% of total revenue in fiscal 1998,
respectively. Our collaboration with Hoechst was terminated by mutual agreement
in October 1998 following a change in Hoechst's business focus away from
chemicals. One project that was the subject of the Hoechst collaboration
agreement was transferred to Celanese, Hoechst's wholly-owned subsidiary.
Hoescht has returned to us all intellectual property that was the subject of the
collaboration agreement in the polyolefin field. That field is the subject of a
subsequent agreement with each of Dow Chemical and Bayer.
Research and Development Expenses
Research and development expenses increased from $2.5 million in fiscal
1996, to $8.8 million in fiscal 1997 and to $17.6 million in fiscal 1998. The
increase in each of these periods was due primarily to an increase in
personnel-related costs in each period. Research and development expenses
represented 182% of total revenues in fiscal 1997 and 128% of total revenues in
fiscal 1998. The decrease as a percentage of total revenues was due primarily to
the growth in our total revenues.
General and Administrative Expenses
General and administrative expenses increased from $567,000 in fiscal 1996,
to $2.1 million in fiscal 1997 to $4.5 million in fiscal 1998. Expenses
increased in each period due primarily to increased personnel-related costs
resulting from additional staffing necessary to manage and support our growth.
General and administrative expenses represented 44% of total revenues for fiscal
1997 and 33% of total revenues for fiscal 1998. The decrease as a percentage of
our total revenues was due primarily to the growth in our total revenues.
Net Interest Income (Expense)
Interest income was $375,000 in fiscal 1996, $843,000 in fiscal 1997 and
$1.1 million in fiscal 1998. Changes in interest income were due primarily to
changes in our cash balance during these periods. Interest expense increased
from $6,000 in fiscal 1996 to $352,000 in fiscal 1997 to $731,000 in fiscal 1998
due to additional equipment financing loans used to partially fund leasehold
improvements and acquisition of equipment.
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<PAGE> 24
Provision for Income Taxes
We incurred net operating losses in fiscal 1996, 1997 and 1998 and
consequently we did not pay any federal, state or foreign income taxes.
As of December 31, 1998, we had a federal net operating loss carryforward
of approximately $16.2 million. We also had federal research and development
credit carryforwards of approximately $500,000. If not utilized, the net
operating losses and credit carryforwards will expire at various dates beginning
in 2010 through 2018. Utilization of the net operating losses and credits may be
subject to a substantial annual limitation due to the "change in the ownership"
provisions of the Internal Revenue Code of 1986, as amended, and similar state
provisions. The annual limitation may result in the expiration of net operating
losses and credit before utilization. See Note 5 of Notes to Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
Since 1996, we have financed our operations to date primarily through
private placements of preferred stock, totaling $52.2 million, and, to a lesser
extent, equipment financing loans and research and development funding from
collaborative partners. As of June 30, 1999, we had $42.2 million in cash, cash
equivalents and investments and $2.4 million available under an equipment
financing line of credit.
Our operating activities provided $8.5 million of cash in the six months
ended June 30, 1999. The source of cash for the six months ended June 30, 1999
was primarily the receipt of research and development funding from collaborative
partners, partially offset by operating expenses. Cash used in our operating
activities was $3.9 million for the six months ended June 30, 1998. For fiscal
years 1996, 1997 and 1998, cash used in our operating activities was $2.5
million, $1.3 million and $2.9 million, respectively. Uses of cash in operating
activities were primarily to fund net operating losses.
Net cash used in investing activities was $7.3 million in fiscal 1996,
$24.0 million in fiscal 1997, $10.2 million in fiscal 1998 and $13.0 million in
the six months ended June 30, 1999. Our investing activities provided $1.0
million in the six months ended June 30 1998. The fluctuations from period to
period are due primarily to the timing of purchases, sales and maturity of
investment securities and the purchase of property and equipment. Purchases of
property and equipment were $1.3 million in fiscal year 1996, $13.2 million in
fiscal year 1997, $5.8 million in fiscal year 1998, $3.5 million in the six
month period ended June 30, 1998 and $2.2 million in the six month period ended
June 30, 1999. We expect to continue to make significant investments in the
purchase of property and equipment to support our expanding operations.
Financing activities provided cash of $13.0 million in 1996, $25.9 million
in 1997, $23.3 million in fiscal 1998, $5.1 million in the six month period
ended June 30, 1998 and $1.1 million in the six month period ended June 30,
1999. These amounts are primarily the proceeds we received from the sale of
preferred stock, net of issuance costs, net equipment and leasehold improvement
loan financings and proceeds from the exercise of stock options.
As of December 31, 1998 and June 30, 1999, our principal commitments were
$3.0 million and $7.0 million, respectively. Principal commitments consisted of
our obligations under operating leases.
We believe that the net proceeds from this offering, together with our
current cash balances and the cash flows generated by operations will be
sufficient to satisfy our
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<PAGE> 25
anticipated cash needs for working capital and capital expenditures for at least
the next 18 months. However, we may seek additional financing within this
timeframe. We may raise additional funds through public or private financing,
collaborative relationships or other arrangements. We cannot assure you that
additional funding, if sought, will be available on terms favorable to us.
Further, any additional equity financing may be dilutive to stockholders, and
debt financing, if available, may involve restrictive covenants. Collaborative
arrangements may require us to relinquish our rights to some of our technologies
or products. Our failure to raise capital when needed may harm our business and
operating results.
A portion of our cash may be used to acquire or invest in complementary
businesses or products or to obtain the right to use complementary technologies.
From time to time, in the ordinary course of business, we may evaluate potential
acquisitions of such businesses, products or technologies. We have no current
plans, agreements or commitments, and are not currently engaged in any
negotiations with respect to any such transaction.
DISCLOSURE ABOUT MARKET RISK
Our exposure to market risk is principally confined to our cash, cash
equivalents and investments which have maturities of less than two years. We
maintain a non-trading investment portfolio of investment grade, liquid debt
securities that limits the amount of credit exposure to any one issue, issuer or
type of instrument. The securities in our investment portfolio are not
leveraged, are classified as available for sale and are therefore subject to
interest rate risk. We currently do not hedge interest rate exposure. If market
interest rates were to increase by 100 basis points, or 1%, from June 30, 1999
levels, the fair value of our portfolio would decline by approximately $205,000.
The modeling technique used measures the change in fair values arising from an
immediate hypothetical shift in market interest rates and assumes ending fair
values include principal plus accrued interest.
YEAR 2000 ISSUES
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer programs
or hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
system failures or miscalculations causing disruptions of operations for any
company using such computer programs or hardware, including, among other things,
a temporary inability to process research data, send invoices or engage in
normal business activities. As a result, many companies' computer systems may
need to be upgraded or replaced in order to avoid "Year 2000" issues.
State of Readiness
We completed an assessment of our information technology systems for year
2000 problems in April 1999. Our internal software development group conducted a
review of our internally developed software, and our information technology
group coordinated a program to assess and document all other systems.
We are a relatively new enterprise and therefore a majority of the computer
hardware and software we use to operate our business has been acquired or
created internally within the past 30 months. While this itself is not
protection against Year 2000 issues, it is a
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<PAGE> 26
factor to consider when comparing the efforts required to achieve Year 2000
readiness against other enterprises with older legacy systems.
Our approach was to prioritize a comprehensive list of all systems on the
basis of their importance to the operation of our business. Working from this
list, we would:
- obtain documentation from third party vendors as to their Year 2000
compliance testing and recommendations;
- devise a review and testing plan for all internal systems;
- conduct the review and testing;
- assess any necessary follow-on actions or remediation required; and
- execute the measures identified.
We have completed execution of this process against all software we have
developed for use in research activities, commercial software used in financial
operations and in support of standard employee daily activities and the systems
used to operate building facilities. In some cases, the process resulted in the
determination that the system had no date processing and therefore was not
deemed to be a risk. In other cases, systems were subjected to a detailed
software code review and a "smoke test" consisting of running the system with
the date manually set beyond December 31, 1999.
We have not replaced any of our systems based on the results of our
assessment. However, we have made modifications to the commercial software
installations based on the vendor's and our assessment of Year 2000 problems. We
have replaced the older computer system that operates our building's card key
door access.
Principally because information from third party hardware and software
vendors has continued to change throughout this year, we have determined that an
additional set of compliance tests are prudent. We will conduct a final review
process of all systems in October 1999. Based on the continuing release of
information and recommended remediation activities from the principal vendor of
our enterprise productivity software, Microsoft, we expect to continue to be
required to make changes to our server software throughout the remainder of
1999.
Budget
To date we have incurred expenses relating to Year 2000 compliance of less
than $50,000. We do not expect the remaining planned work to exceed $25,000.
These costs have been included in the operating expenses of 1999.
Reasonably Likely Worst Case Scenario
If we, our customers, our providers of hardware and software, or our
third-party computer network providers fail to remedy any Year 2000 issues, the
reasonably likely worst case scenario would be the interruption of our research
programs, which could have a material adverse affect on our business, financial
conditions and results of operations. Presently we are unable to quantitatively
estimate the duration and extent of any such interruption, or estimate the
effect such interruption may have on our future revenue. However, we believe
that the impact of any Year 2000 issue on our research operations will be
limited to the ongoing execution of new experiments. We do not expect that any
historical data will be affected.
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<PAGE> 27
Contingency Plans
We do not believe that we will need to implement a Year 2000 contingency
plan. We expect to complete our Year 2000 plan in October 1999. The effort
required to complete the plan is minimal. Therefore, we believe that we can
complete the planned work within this timeframe. Additionally, we plan on
implementing a company-wide system shutdown on December 31, 1999 and a
controlled startup by the information technology organization on January 2, 2000
prior to the opening of business on January 3, 2000. This will allow us to
immediately identify and address any issues.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Financial
Instruments and for Hedging Activities," which will be effective for our fiscal
year 2001. This Statement establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized in earnings
unless specific hedge accounting criteria are met. SFAS 133 is not anticipated
to have a significant impact on our operating results or financial condition
when adopted, since we currently do not engage in hedging activities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 requires that
entities capitalize certain costs related to internal use software once certain
criteria have been met. We adopted SOP No. 98-1 effective January 1, 1999. The
adoption of SOP No. 98-1 has not had a material impact on our financial
statements.
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<PAGE> 28
BUSINESS
We are a pioneer of high-speed technologies for the discovery of new
materials. Our proprietary technologies, including instruments, software and
methods, represent a complete platform designed to reduce the cost and time of
new materials discovery. We are able to generate hundreds to thousands of unique
materials at a time and screen those materials rapidly and automatically for
desired properties. We believe our approach is up to 100 times faster than
traditional research methods and reduces the cost per experiment to as low as 1%
of traditional research methods.
We are applying our technology to discover a wide range of material types.
Our efforts can be grouped into four market areas:
- Commodity Chemicals and Polyolefins. These major chemicals, plastics and
rubbers include products such as ethylene glycol, acrylic acid, ethanol,
and polyolefins such as polyethylene, polypropylene and polystyrene. The
annual global market for commodity chemicals and polyolefins is over $500
billion. Opportunities exist for us to add value within this sector by
discovering catalysts that reduce manufacturing costs through the use of
cheaper raw materials and by developing alternatives to the current
multi-step, energy and capital intensive processes. We may also discover
catalysts that create polyolefins with improved properties and as a
result are able to compete against more expensive materials.
- Fine Chemicals. Fine chemicals are developed to achieve specific
performance characteristics and are incorporated into pharmaceutical and
agricultural products. The annual worldwide market for fine chemicals is
approximately $65 billion. Due to the diversity and short life cycle of
fine chemicals products and the intense competition between fine
chemicals manufacturers, flexibility and speed in process development and
manufacturing are vital to success. In this market, we add value by
rapidly discovering diverse families of catalysts and improving
production processes.
- Specialty Polymers. Specialty polymers are incorporated into adhesives,
sealants, paints, and coatings in the form of latexes. The annual
worldwide market for latex polymers is estimated to be $10 billion.
Within this sector, we seek to discover materials to enhance product
performance and to create new businesses using novel polymer structures
and architectures.
- Electronic and Related Materials. Electronic and related materials
comprise a diverse group of functional materials. Examples include
phosphors for lighting, displays and radiography, thermoelectric
materials for cooling, fuel cells for automotive applications, and
magnetic materials for permanent magnets. We seek to discover
breakthrough materials with unique and unmatched functional properties
that will enable the creation of new products or dramatically enhance the
performance of existing products.
INDUSTRY BACKGROUND
Chemical companies are under heightened pressure from slowing sales growth
and decreasing profit margins. These indicators reflect maturing end markets,
accelerating price pressures, increasing competitive intensity and industry
consolidation. As a result, chemical companies are focused on reducing costs,
increasing innovation and creating new businesses based on proprietary
materials. New products and materials typically carry higher prices and profit
margins than the products and materials they replace. New products and
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<PAGE> 29
materials are also critical for attaining and maintaining leading market
positions, in creating barriers to entry and adding value to customer
relationships. The transformation of the existing polyethylene industry by
metallocene catalysis, a new catalyst technology which has enabled the creation
of tailored polyethylenes, is an example of a materials innovation that has
resulted in enhanced production flexibility and product performance within a $50
billion industry.
As the chemical and electronics industries consolidate and become more
globalized, and as their customers become larger and more global as well,
chemical and electronics companies are under increasing pressure to accelerate
the discovery of new products and materials. Traditional materials discovery
relies on an expensive and time-consuming process of trial and error: making one
material; testing it; then making a different material; testing it and so on.
Traditional discovery methods are not fast enough to keep pace with product life
cycles and growth expectations within the chemical and electronics industries.
The development of combinatorial synthesis and rapid screening methods have
the potential to cost-effectively accelerate materials discovery and
fundamentally change the way materials are discovered. We believe combinatorial
technologies leverage the full potential of personnel by increasing their
experimental productivity by a factor of 100 or more. This promise of a far more
efficient discovery method combined with a greater opportunity for product
innovation is attracting increased attention from the chemical and electronics
industries. We believe that few chemical and electronics companies employ
combinatorial synthesis techniques or have the necessary specialized equipment
available for such activities.
SYMYX SOLUTION
Our technology provides complete platforms for materials discovery. Using
our miniaturized, automated technology to execute hundreds to thousands of
experiments at a time, our scientists can dramatically increase the probability
of success and reduce the time and costs per experiment to discover new
materials. Using traditional trial and error methods, a team consisting of a
chemist plus a technician could perform 500 to 1,000 experiments per year. In
our labs, that same team could perform up to 50,000 experiments per year. As a
result, our scientists would generate significantly more data, increase the
possibility of discoveries within that timeframe, and reduce the associated
costs per experiment dramatically.
<TABLE>
<CAPTION>
TRADITIONAL RESEARCH APPROACH SYMYX DISCOVERY TECHNOLOGIES
----------------------------- ----------------------------
<S> <C> <C>
Team....................... 1 chemist + 1 technician 1 chemist + 1 technician
Cost/year.................. $500,000 $500,000
Experiments/year........... 500 - 1,000 20,000 - 50,000
Cost/experiment............ $500 - $1,000 $10 - $25
</TABLE>
To achieve these efficiencies, we require extensive capabilities in
materials synthesis, screening and data analysis. A particular challenge is the
ability to screen materials for a wide range of properties. For example:
- to discover a new catalyst we need to screen how well it performs a
specific chemical reaction;
- to discover a new phosphor for lighting applications, we need to screen
optical properties such as color and brightness; and
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<PAGE> 30
- to discover a new polymer, we need to screen for physical and mechanical
properties such as molecular weight and toughness.
As a pioneer in combinatorial materials science, we found no existing
technology capable of meeting our synthesis, screening and data analysis
requirements. To address this challenge, we assembled a team of people who have
expertise in the fields of inorganic, physical, polymer and organic chemistries,
physics, engineering and software programming. This team has successfully
designed, built and validated a powerful array of highly specialized proprietary
instruments and software. Our scientists can now synthesize a wide range of
materials and screen for properties including catalytic, chemical, physical,
mechanical, electronic and optical properties. In addition, we continue to
expand our capabilities through the development of new instruments and software
and enhanced versions of existing systems.
SYMYX STRATEGY
Our objective is to be the leading company using high-speed technologies
for the discovery of new materials with commercially valuable properties. Key
strategies that we intend to follow in pursuit of our objective are:
- entering into collaborative research and early-stage licensing agreements
with corporate partners that provide funding for research and discovery
efforts, commercialize our materials and pay royalties on commercial
sales;
- investing in proprietary materials research efforts to discover materials
with near-term commercial potential and then enter into late-stage
licensing arrangements or commercialize materials directly; and
- selling and licensing selected equipment and software to chemical and
other industrial companies for their own use in optimization of existing
materials.
Collaborative Research and Early-Stage Licensing
In collaboration with major chemical and other industrial companies, we
seek to discover:
- new catalysts to manufacture commodity chemicals and polyolefins;
- new polymer formulations and pigments for industrial applications; and
- new phosphors for applications including lighting and displays.
We provide the platform technologies and effort, and our partners have
rights to develop and commercialize resulting materials within their predefined
field of exclusivity. Typically, we enter into collaborative arrangements to
discover materials that require considerable investment in product development
and manufacturing, as well as extensive marketing efforts. Our collaborative
partners have already developed the infrastructure to support these
requirements, and may therefore be in a strong position to commercialize our
discoveries.
We receive funding from our collaborative partners through annual research
payments. These payments are made over the term of the research contract, which
is generally two to three years. If a new material is discovered and
commercialized, we will receive either royalties or milestone payments. We
believe that we have the potential for royalties ranging from 3% to 7% on sales
of products incorporating our materials, such as pigments,
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<PAGE> 31
phosphors and polymers and 1% to 3% on sales of end products manufactured using
our catalysts, such as high-volume commodity chemicals and polyolefins.
We currently have eight collaborative partners, including Bayer which has
expanded our collaboration three times to date. The table below indicates, for
each of our currently active collaborations, the collaborative partner, date and
field.
<TABLE>
<CAPTION>
DATE(S) OF
PARTNER ALLIANCE FIELD(S)
------- ---------- --------
<S> <C> <C>
Agfa.......... March 1998 X-ray phosphors for radiography
BASF.......... Specialty polymers for industrial
March 1999 formulations
Bayer......... March 1998, Polyolefins, commodity chemicals
May 1998,
January 1999,
September 1999
Celanese...... August 1998 Commodity chemicals
Ciba Specialty
Chemicals... April 1998 Pigments
Dow
Chemical.... January 1999 Polyolefins
Osram OS*..... December 1998 Phosphors for lighting
Unilever...... December 1998 Polymers for product formulations
</TABLE>
- -------------------------
* an affiliate of Siemens
Our collaborations, together with government grants, provide for over $85
million in aggregate commitments for research payments. Through June 30, 1999,
we had received $43 million in research payments under these agreements with the
remaining amounts scheduled to be paid through 2003. In order to maintain and
grow our research and product pipelines, we intend to continue to enter into new
collaborative arrangements. As a result of these new arrangements, and the
conclusion of existing collaborations upon completion of research or transfer of
development candidates to our collaborative partners for commercialization, our
portfolio of collaborations will change over time. We expect that new
collaborations will come from existing collaborative partners undertaking new
research initiatives as well as new collaborative partners.
One of our most advanced discovery efforts to date has resulted from our
collaboration with Agfa in the area of discovery of new x-ray phosphors for
radiography. Many groups have worked over the past fifteen years to find
alternative materials that perform better than existing materials. Under our
collaboration, we have made and screened over 50,000 phosphors, and we
discovered several that have shown the potential to provide higher resolution,
be easier to manufacture and have a longer shelf life than existing materials.
These materials have been transferred to Agfa, and we have been advised by Agfa
that their objective is to have products based on these materials on the market
during 2001.
Symyx Proprietary Materials
We believe that the assets resulting from our investment in proprietary
research programs will be a significant contributor of future value. Our
proprietary research efforts are focused on discovery of products for specialty
markets with well defined materials needs and short-term development and
commercialization cycles.
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<PAGE> 32
One significant area of current activity is fine chemicals. In the area of
fine chemicals, we are working to discover families of catalysts that would be
used in the production of pharmaceutical intermediates. Pharmaceutical
intermediates are chemicals that are transformed into a pharmaceutical product.
Another area of activity is specialty polymers. In this area, we have developed
proprietary technology to create polymers with customized, predictable
properties called block co-polymers.
We also have several programs in electronic materials, funded by ourselves
and by the U.S. Office of Naval Research Defense Advanced Research Projects
Agency (known as DARPA) and the United States Department of Energy. Our DARPA
program is funding research relating to thermoelectric materials used for
refrigeration and applications requiring precise active cooling devices. These
applications include computer chips and missile guidance systems. Our DARPA
program is also funding research for magnetic materials used as permanent
magnets in applications including electro-magnetic motors. Our program with the
Department of Energy is funding research relating to materials for fuel cells
for potential use in automobiles. Funding under the DARPA and Department of
Energy programs is structured as grants, and we own the rights to commercialize
materials discovered under these programs.
We expect to commercialize development candidates discovered through our
proprietary materials programs either by manufacturing, marketing, and selling
the product ourselves or through late-stage licensing arrangements. We expect to
be able to obtain significantly higher royalty rates under these late-stage
licenses than under our collaborative agreements because we will have completed
essentially all development work at the time we license the product.
We also have developed a "quick-strike" licensing model in which we would
assume the research risk during a short, well-defined, research period of
approximately three months in exchange for the customer's agreement to make
milestone payments and enter into a license agreement upon completion of
research and technical validation. We expect that royalty rates under these
licenses will be in a range of 4% to 7% of sales, which is attractive to us due
to the breadth and number of projects which we believe we can successfully
complete annually.
Sale of Discovery Tools Systems and Other Equipment
Our scientific and technical team has spent considerable time and resources
developing a broad array of instruments, software and know-how in support of our
research. In addition to our alliances, we are seeking to meet the growing
demand for combinatorial technologies by offering selective access to some of
our equipment and technology. We believe that these programs will enhance, not
detract from, our collaborative arrangement efforts by reinforcing our position
as the leading source for combinatorial technology in materials science and by
satisfying our customers' desire to perform post-discovery optimization and
related activities in-house.
The Discovery Tools that we initially plan to sell are designed for
optimization, not for materials discovery. Optimization is the process of
improving and refining the chemical properties of a development candidate prior
to commercialization. We do not expect that our sale of Discovery Tools will
affect our ability to enter into new research collaborations. Companies enter
into collaborations with us to access all of our tools including our highest
throughput screening equipment designed for new materials discovery, our
scientific and technical staff and our libraries of catalysts and materials. We
do not plan to offer access to these resources as part of our Discovery Tools
program.
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Our Discovery Tools for optimization will be sold together with a license
to associated software, know-how and patents. Our first planned offering is a
combination of a multi-channel polymer reactor system together with two
screening instruments. Each of these systems will likely sell for several
million dollars and will have a long sales cycle involving both marketing the
system and designing the system to meet customer requirements.
In addition to the sale of Discovery Tools, we also believe that there is
significant commercial value in the manual bench instruments that we have
developed to perform small scale parallel synthesis of materials. We have formed
a collaboration with Argonaut Technologies, Inc. to capture this opportunity.
Argonaut is an instrument company that develops and commercializes synthesizers,
instruments, software and chemical resins and reagents to accelerate and
automate chemical synthesis. Argonaut will refine our designs for manual
benchtop instruments, manufacture the instruments and sell them worldwide. In
return, we will receive a portion of the profits from the sale of these
instruments. Our first product, sold with both the Argonaut and Symyx
trademarks, was introduced for sale in August 1999. This instrument, the
Endeavor, is an eight-channel manual reactor used to synthesize polymers and
other chemicals under high pressure. This instrument has a sale price of
approximately $60,000. We expect other manual bench instruments developed by us
and commercialized by Argonaut to have similar sales prices.
TECHNOLOGY
Our scientists begin the discovery process working with our collaborative
partners or our own business development staff to define the research objective
in terms of the specific properties a new material should have to meet the needs
of a given application. We then apply the components of our combinatorial
process, synthesis, screening and informatics, to discover materials that match
these criteria.
[TARGETED NEW MATERIAL DIAGRAM]
Synthesis
The materials research process begins with chemists' theories about what
elements from the periodic table of elements might be combined to create new
materials with desired properties. However, while chemists working in
traditional labs have to choose the few experiments they will perform on a given
day, our chemists have the ability to perform hundreds or thousands of
experiments at once. Our chemists are therefore able to pursue their theories
both broadly -- across a wide range of elements -- and comprehensively --
creating materials with the same components in different ratios.
A Symyx chemist initiates the synthesis process by using Library Studio, a
computer software package created by our programmers to design the group, or
"library," of materials to be synthesized. These instructions, or "recipes," are
then relayed to automated synthesis instruments. These instruments create the
library on a single substrate such as a three-inch diameter silicon wafer or a
96-well plate. The quantity of each compound synthesized is very small,
generally ranging from micrograms to hundreds of milligrams. This contrasts
dramatically with traditional synthesis, where gram to kilogram quantities of a
material are usually necessary. Libraries synthesized on silicon wafers may
range from a
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few hundred different candidate materials to as many as 25,000, depending on the
type of material and the type of analysis to be done.
Each material synthesized represents a unique experiment and potential
discovery. The desired end result of these experiments is defined at the outset
of the experiment as a target material having specific performance properties.
Our scientists, in conjunction with our collaborative partners, or independently
for our proprietary discovery programs, set the specific performance properties
and define the desired performance attributes of the target material for a given
application or applications. Generally, these criteria are well beyond the
performance attributes of currently used materials.
Screening
Once created, the library is analyzed for desired properties. As with
synthesis, our technical staff has designed and built a broad array of
instruments and software to evaluate different properties under a wide variety
of process conditions. These properties include catalytic, physical, mechanical,
thermal, chemical, electronic and optical properties. In general, a Symyx
chemist can design, synthesize and screen a library in a single day.
To reach the point of commercialization, a candidate material must progress
through an increasingly exhaustive series of tests, or stages, known as hits,
leads and development candidates.
- Hits. First, materials are screened to identify those that have
properties defined for the target discovery, called "hits." Hits are
subjected to additional testing and optimization, to find a larger number
of needed properties. Hits also identify areas that merit further
exploration, and new libraries are created using this information.
- Leads. Candidate materials that continue to meet or exceed the defined
criteria are then classified as "leads." Leads are then transferred to a
partner or processed internally for additional testing and scale up.
Leads are then tested on a larger scale, as bulk samples of 1 to 100
grams, to confirm that the materials still perform at this "bench scale"
level.
- Development Candidates. Once a lead has passed this bench scale testing
by either a collaborative partner or Symyx, it becomes a development
candidate. Finally, if all is successful, the decision will be made to
commercialize the material.
In our experience to date, approximately 0.1% of materials tested become
hits, 10% to 15% of hits become leads and 5% to 10% of leads become development
candidates. The actual number of hits, leads and development candidates that
have been identified in our four target markets through August 1999 is set forth
in the table below.
<TABLE>
<CAPTION>
COMMODITIES, FINE SPECIALTY ELECTRONIC
POLYOLEFINS CHEMICALS POLYMERS MATERIALS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
HITS 466 70 16 183
- ---------------------------------------------------------------------------------------------
LEADS 43 14 6 25
- ---------------------------------------------------------------------------------------------
DEVELOPMENT CANDIDATES 2 2 1 2
- ---------------------------------------------------------------------------------------------
</TABLE>
We have screened over 500,000 compounds in 1999. Of the development
candidates we have generated, three have been transferred to our partners for
further validation. We are developing the other four internally. Further testing
of many of the hits and leads is underway to identify additional development
candidates.
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<PAGE> 35
Once a material has been identified as a development candidate, the time to
the first sale or commercial usage may be as short as 1 to 2 years for many
pigments, specialty polymers, fine chemicals catalysts or electronic materials,
such as phosphors. Industrial catalysts to produce high volume commodity
chemicals, on the other hand, may require 5 to 7 or more years to reach the
market because of the extensive process development and capital investment
involved.
Informatics
A critical factor in our discovery process is the ability to retain and
access the huge amounts of data generated by our synthesis and screening
activities. Given the broad acceptance of high-speed combinatorial discovery in
pharmaceuticals, a number of applications exist to support organic chemistry.
However, those solutions were not sufficient to address the storage and
retrieval needs of our diverse array of inorganic, organometallic and polymer
chemistries. To that end, we have devoted considerable resources to build a
proprietary database capable of addressing our unique needs. Our chemists can
query this database to identify materials screened in the past that possess the
property or properties specified. We believe that this database will emerge as a
powerful tool in accelerating materials discovery by enabling our scientists to
benefit from the cumulative effect of all of our research.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
Our success depends upon our proprietary technology. There are five general
patent areas within our combinatorial approach:
- library synthesis methods;
- the libraries themselves;
- screening or characterization methods;
- equipment and software; and
- new materials.
We have 76 patent applications pending in the United States, and 30 foreign
patent applications pending. In addition, we have 5 patent applications allowed
in the United States containing over 230 claims. In addition to patents, we rely
on copyright, trademark and trade secret rights, confidentiality procedures and
licensing arrangements to establish and protect our proprietary rights.
As part of our confidentiality and trade secret protection procedures, we
enter into non-disclosure agreements with our employees, consultants and
potential collaborative partners. Despite these precautions, third parties could
obtain and use our products or technology without authorization, or develop
similar technology independently. It is difficult for us to police unauthorized
use of our products. Effective protection of intellectual property rights is
unavailable or limited in some foreign countries. The protection of our
proprietary rights may be inadequate and our competitors could independently
develop similar technology, duplicate our products or design around any patents
or other intellectual property rights we hold.
COMPETITION
The field of combinatorial materials science is increasingly competitive.
We are aware of several companies that are applying their expertise in
combinatorial chemistry to
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<PAGE> 36
materials research and development. These companies include Aperion, a joint
venture between CombiChem and Catalytica, and Cambridge Combinatorial, an
affiliate of Oxford Molecular. We are also aware of some chemical companies with
internal combinatorial programs participating in materials research and
development consortiums. In addition, Shell Chemicals is participating in a
consortium in The Netherlands and BASF is funding a start-up company in
Heidelberg, Germany named HTE. BASF is also one of our collaborative partners.
In addition, academic and research institutions may seek to develop technologies
that would be competitive with our systems for materials discovery. Because
combinatorial materials science is an emerging field, competition from
additional entrants may increase.
Some of our competitors may be addressing the same materials targets as
Symyx or our collaborative partners. Many of our current and potential
competitors, either alone or together with their collaborative partners, have
greater financial, manufacturing, marketing and sales resources than we do.
Accordingly, our competitors may succeed in obtaining patent protection or
commercializing products before us. If we commence commercial product sales, we
will be competing against companies with greater marketing, sales and
manufacturing capabilities, areas in which we have limited or no experience.
EMPLOYEES
As of June 30, 1999, we had a total of 130 employees, including 106
scientific and technical employees and 24 people in business development, legal
and general and administrative services. Of our scientific and technical staff,
87 have masters or doctorate degrees. None of our employees is represented by a
labor union, and we consider our employee relations to be good.
LEGAL PROCEEDINGS
We are not currently a party to any material pending legal proceedings.
FACILITIES
Our primary offices are located in approximately 38,800 square feet of
space in Santa Clara, California under a lease expiring on November 2007. We
have leased a second building of approximately 24,000 square feet also in Santa
Clara, which we expect will be ready for occupancy in January 2000, with a lease
expiring January 2008. In addition, we have a month-to-month lease on a 5,000
square foot facility. We believe that our existing facilities are adequate for
our needs through at least the end of 2000. We believe that any additional space
we may need in the future will be available on commercially reasonable terms.
SCIENTIFIC ADVISORS
We have recruited several leading researchers in our fields of interest to
serve as scientific advisors. These advisors have fixed term contracts ranging
from one to three years. In general, they serve on an exclusive basis within a
defined field of collaboration. These advisors have received option grants to
purchase our common stock. In addition, some may receive cash compensation, and
they are reimbursed for expenses.
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<PAGE> 37
The following individuals are scientific advisors in their respective areas
of specialization:
<TABLE>
<S> <C>
Chairman
Peter Schultz.................. Institute Director, Novartis Institute for Functional
Genomics, Professor of Chemistry at the Scripps
Research Institute
Technical Strategy
Alejandro Zaffaroni............ Managing Director, Technogen Enterprises LLC, a
venture
capital fund
George Whitesides.............. Mallinckrodt Professor of Chemistry, Harvard
University
Catalysis
Michel Boudart................. Keck Professor of Chemical Engineering, Emeritus,
Stanford University
Stephen Buchwald............... Camille Dreyfus Professor of Chemistry,
Massachusetts Institute of Technology
John Groves.................... Hugh Stott Taylor Professor of Chemistry,
Princeton University
Robert Grubbs.................. Victor & Elizabeth Atkins Professor of Chemistry,
California
Institute of Technology
Gregory Kovacs................. Associate Professor, Electrical Engineering, Stanford
University
Fine Chemicals
Mark Gallop.................... Vice President of Chemistry, Xenoport
Abul Iqbal..................... Head of Global Research and Development, Colors
Division,
Ciba Specialty Chemicals
Klaus Kuhlein.................. Director, Operative Research, Member of the
Management
Committee of Aventis Research & Technologies (member
of the Hoechst Group), Retired
David MacMillan................ Assistant Professor, University of California,
Berkeley
Polymers
Jean Frechet................... Professor of Chemistry, University of California,
Berkeley
Craig Hawker................... Research Staff Member, IBM Almaden Research Center
Virgil Percec.................. P. Roy Vagelos Chair and Professor of Chemistry,
University of Pennsylvania
Owen Webster................... DuPont Fellow, Retired
Electronic Materials
Frank DiSalvo.................. John A. Newman Professor of Physical Science,
Cornell University
Theodore Geballe............... Professor of Applied Physics and of Materials Science
and
Engineering, Emeritus, Stanford University
</TABLE>
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<PAGE> 38
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding our executive
officers and directors as of June 30, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Steven D. Goldby.................... 59 Chairman of the Board and Chief Executive
Officer
Isy Goldwasser...................... 29 President and Chief Operating Officer
W. Henry Weinberg, Ph.D. ........... 54 Senior Vice President and Chief Technical
Officer
Jeryl L. Hilleman................... 41 Senior Vice President and Chief Financial
Officer
Thomas R. Baruch.................... 60 Director
Samuel D. Colella................... 60 Director
Martin Gerstel...................... 58 Director
Baron Gaulthaus Kraijenhoff......... 77 Director
Francois A. L'Eplattenier, Ph.D. ... 60 Director
Kenneth J. Nussbacher............... 46 Director
Mario M. Rosati..................... 53 Director
Peter G. Schultz, Ph.D. ............ 43 Director
Isaac Stein......................... 52 Director
</TABLE>
Steven D. Goldby has served as our Chairman of the Board and Chief
Executive Officer since July 1998. Prior to joining Symyx, Mr. Goldby served as
Chief Executive Officer of MDL Information Systems, Inc. from 1987 to July 1998.
He held numerous management positions at ALZA Corporation from 1968 to 1981
including President of ALZA Pharmaceuticals and President of Dynapol, a
subsidiary of ALZA. Mr. Goldby joined MDL Information Systems in 1982 as a Chief
Operating Officer. He is a director of Aspect Development, Inc. Mr. Goldby holds
an A.B. from the University of North Carolina and a J.D. from Georgetown
University Law School.
Isy Goldwasser has served as our President and Chief Operating Officer
since February 1998. From February 1996 to February 1998, Mr. Goldwasser served
as our Vice President of Corporate Development. From the founding of Symyx until
February 1996, he held a business development position with us in which he was
responsible for applications development, financing and operations. Mr.
Goldwasser holds a B.S. from the Massachusetts Institute of Technology and an
M.S. from Stanford University.
W. Henry Weinberg has served as our Senior Vice President since August 1999
and our Chief Technical Officer since March 1996. Dr. Weinberg also previously
served as our Vice President from March 1996 to August 1999. Dr. Weinberg is
also Adjunct Professor of Chemical Engineering, Materials Engineering, and
Chemistry at the University of California, Santa Barbara. Dr. Weinberg was
Professor of Chemical Engineering, Materials Engineering, and Chemistry at the
University of California, Santa Barbara from 1989 through September 1999. Dr.
Weinberg is a member of the National Academy of Engineering. He holds a B.S.
from the University of South Carolina and a Ph.D. from the University of
California, Berkeley.
Jeryl Lynn Hilleman has served as our Senior Vice President since August
1999 and our Chief Financial Officer since June 1997. Ms. Hilleman also
previously served as our
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<PAGE> 39
Vice President from June 1997 to August 1999. From 1992 to 1997, Ms. Hilleman
held several senior positions at Geron Corporation, a biopharmaceutical company,
including Vice President, Finance and Administration. Ms. Hilleman holds an A.B.
from Brown University and an M.B.A. from the Wharton School of Business.
Thomas R. Baruch has served as one of our directors since May 1996. Since
1988, Mr. Baruch has been a general partner of CMEA Ventures, a venture capital
firm. From 1990 to 1996, Mr. Baruch also served as a special partner of New
Enterprise Associates. Mr. Baruch serves on the boards of directors of Netro
Corp. and Physiometrix Inc. Mr. Baruch holds a B.S. from Rensselaer Polytechnic
Institute and a J.D. from Capital University.
Samuel D. Colella has served as one of our directors since August 1997.
Since 1984, Mr. Colella has been a general partner of Institutional Venture
Partners. Mr. Colella also serves as Chairman of Onyx Pharmaceuticals. Mr.
Colella holds a B.A. and B.S. from the University of Pittsburgh and an M.B.A.
from Stanford University.
Martin S. Gerstel has served as one of our directors since February 1995.
Mr. Gerstel serves as Chairman of Compugen, Ltd. Previously, Mr. Gerstel
participated in the founding of ALZA Corporation, where he held numerous
positions including President and Chief Operating Officer from 1982 to 1987 and
Co-Chairman and Chief Executive Officer from 1987 to 1993. Mr. Gerstel is a
director of Teva Pharmaceuticals. Mr. Gerstel holds a B.S. from Yale University
and an M.B.A. from Stanford University.
Baron Gualthaus Kraijenhoff has been one of our directors since January
1996. Following his retirement in 1978, Baron Kraijenhoff served as President of
the Supervisory Council of AKZO N.V. since 1980. Baron Kraijenhoff also held
numerous other management positions with AKZO N.V. and its predecessor company,
KZO, including President of the Board of Management of AKZO N.V., President of
the Board of Management of KZO, and Member of the Board of Management of KZO.
Francois A. L'Eplattenier has served as one of our directors since October
1996. Since the merger of Ciba-Geigy with Sandoz to form Novartis in 1996, Dr.
L'Eplattenier has served as Chairman of the Novartis Venture Fund. Since 1988,
Dr. L'Eplattenier has served as a member of the Executive Committee of
Ciba-Geigy, where he is responsible for Research and Development of the Group
world-wide. From 1981 to 1988, Dr. L'Eplattenier served as Head of Research and
Development of Plastics, Pigments and Additives at Geigy. From 1977 to 1981, Dr.
L'Eplattenier served as Head of Central Research of Geigy. Dr. L'Eplattenier
presently is a member of the Board of the Swiss Federal Institute of Technology.
Dr. L'Eplattenier holds an M.S. and Ph.D. from the Swiss Federal Institute of
Technology.
Kenneth J. Nussbacher has served as one of our directors since February
1995. Mr. Nussbacher has been Executive Vice President of Affymetrix since 1997
and was Chief Financial Officer of Affymetrix from 1995 to 1997. From 1989 to
1995, he held several management positions at Affymax, most recently as
Executive Vice President for Business and Legal Affairs and Managing Director of
Affymax Technologies N.V. Mr. Nussbacher holds a B.S. from Cooper Union and a
J.D. from Duke University.
Mario M. Rosati has served as one of our directors since September 1994.
Mr. Rosati has been with the Palo Alto, California law firm of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, since 1971, first as an associate
and then as a member since 1975. Mr. Rosati also serves as a director of Aehr
Test Systems, Genus, Inc., MyPoints.com, Inc., Ross Systems, Inc., Sanmina
Corporation, The Management Network
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<PAGE> 40
Group, Inc. and Vivus, Inc. Mr. Rosati holds a B.A. from the University of
California, Los Angeles and a J.D. from the University of California, Berkeley,
Boalt Hall School of Law.
Peter G. Schultz, Ph.D. has been one of our directors since January 1996
and is one of our founders. Since November 1998, Dr. Schultz has been Head of
the Novartis Institute for Functional Genomics. From 1985 to 1998, Dr. Schultz
was Professor of Chemistry at the Lawrence Berkeley Laboratories of the
University of California, Berkeley. He holds a B.S. and a Ph.D. from the
California Institute of Technology.
Isaac Stein has been one of our directors since October 1996. Since 1983,
Mr. Stein has been President of Waverley Associates, a private investment firm.
Mr. Stein is also a Managing Director of Technogen Enterprises, L.L.C. and a
director of ALZA Corporation, the Benham Group of mutual funds and CV
Therapeutics, Inc. Mr. Stein holds an B.A. from Colgate University and a J.D.
and an M.B.A. from Stanford University.
BOARD OF DIRECTORS
We currently have ten directors. Upon completion of this offering, our
board of directors will be divided into three classes, each with staggered
three-year terms. As a result, only one class of directors will be elected at
each annual meeting of our stockholders, with the other classes continuing for
the remainder of their respective three-year terms.
Our class I directors, whose terms will expire at the 2000 annual meeting
of stockholders, are Thomas R. Baruch, Samuel D. Colella and Martin Gerstel. Our
class II directors, whose terms will expire at the 2001 annual meeting of
stockholders, are Steven D. Goldby, Baron Gaulthaus Kraijenhoff and Francois A.
L'Eplattenier Ph.D. Our class III directors, whose terms will expire at the 2002
annual meeting of stockholders, are Kenneth J. Nussbacher, Mario M. Rosati,
Peter G. Schulz, Ph.D. and Issac Stein.
BOARD COMMITTEES
Our board of directors currently has an audit committee and a compensation
committee. The audit committee consists of Thomas R. Baruch, Martin Gerstel and
Kenneth J. Nussbacher. The audit committee makes recommendations to the board of
directors regarding the selection of independent auditors, reviews the scope of
audit and other services by our independent auditors, reviews the accounting
principles and auditing practices and procedures to be used for our financial
statements and reviews the results of those audits.
The compensation committee consists of Samuel D. Colella, Mario M. Rosati
and Isaac Stein. The compensation committee makes recommendations to the board
of directors regarding our stock plans and the compensation of officers.
DIRECTOR COMPENSATION
Our non-employee directors are reimbursed for expenses incurred in
connection with attending board and committee meetings but are not compensated
for their services as board or committee members. We have in the past granted
non-employee directors options to purchase our common stock pursuant to the
terms of our stock plans, and our board continues to have the discretion to
grant options to new non-employee directors. Beginning in 2000, our outside
directors will each annually receive automatic, nondiscretionary grants of
options to purchase 7,500 shares of our common stock.
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<PAGE> 41
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee is currently, or has ever
been at any time since our formation, one of our officers or employees. No
member of the compensation committee serves as a member of the board of
directors or compensation committee of any entity that has one or more officers
serving as a member of our board of directors or compensation committee.
EXECUTIVE OFFICERS
COMPENSATION
The following table sets forth the compensation paid by us during 1998 to
our Chief Executive Officer and our other executive officers who received salary
compensation of more that $100,000 during 1998:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION RESTRICTED SECURITIES
------------ STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION SALARY($) AWARDS($) OPTIONS(#) COMPENSATION($)
--------------------------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
Steven D. Goldby....................... 1$25,040(1) $ 0(2) -- --
Chief Executive Officer and Chairman
of the Board
Isy Goldwasser......................... 171,667 -- 186,666 --
President and Chief Operating Officer
W. Henry Weinberg, Ph.D. .............. 240,533 -- -- $211,120(3)
Senior Vice President and Chief
Technical Officer
Jeryl L. Hilleman...................... 181,667 -- 58,333 --
Senior Vice President and Chief
Financial Officer
</TABLE>
- ---------------
(1) Mr. Goldby joined Symyx in July 1998. His annual salary is $250,080.
(2) Mr. Goldby purchased 525,000 shares of common stock at a purchase price of
approximately $0.58 per share. The aggregate purchase price was $303,750. If
Mr. Goldby's services to Symyx are terminated, Symyx has the option to
repurchase the shares at $0.58 per share. This option lapses as to a portion
of the shares over time. The repurchase option will lapse for all of the
shares in July 2002. The fair market value of Symyx' common stock as of
December 31, 1998 was $0.96 per share as determined by the board of
directors. The appreciated value of Mr. Goldby's shares as of December 31,
1998 was $200,250. The appreciated value is the difference between $0.58 and
$0.96, $0.38, multiplied by the number of shares, 525,000.
(3) Consists of a $71,250 housing allowance and $139,870 in relocation
reimbursement payments.
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<PAGE> 42
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information relating to stock options
granted during 1998 to our Chief Executive Officer and our other executive
officers who received salary compensation of more than $100,000. In accordance
with the rules of the Securities and Exchange Commission, also shown below is
the potential realizable value over the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually. These amounts are mandated by the Securities
and Exchange Commission and do not represent our estimate of future stock price.
Actual gains, if any, on stock option exercises will depend on the future
performance of our common stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN PRICE PER EXPIRATION ---------------------
NAME GRANTED 1998(1) SHARE DATE 5% 10%
---- ---------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Steven D. Goldby.............. -- -- -- -- -- --
Isy Goldwasser................ 155,555 13.71% $ 0.39 3/01/08 $38,153 $96,687
31,111 2.74 0.96 12/04/08 18,783 47,600
W. Henry Weinberg, Ph.D. ..... -- -- -- -- -- --
Jeryl L. Hilleman............. 58,333 5.14 0.39 3/01/08 14,307 36,257
</TABLE>
- -------------------------
(1) We granted options to purchase a total of 1,134,890 shares of common stock
during 1998.
AGGREGATE OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for our Chief Executive Officer
and our other executive officers who received salary compensation of more than
$100,000 in 1998, relating to option exercises in 1998 and the number and value
of securities underlying exercisable and unexercisable options held at December
31, 1998:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven D. Goldby...... -- -- -- -- -- --
Isy Goldwasser........ -- -- 186,666 -- $88,666 --
W. Henry Weinberg..... 233,333 $135,000 -- -- -- --
Jeryl L. Hilleman..... 23,333 13,300 35,000 -- 19,950 --
</TABLE>
- -------------------------
(1) Value realized reflects the fair market value of our common stock underlying
the option on the date of exercise minus the aggregate exercise price of the
option.
(2) Value of unexercised in-the-money options are based on a value of $0.96 per
share, the fair market value of our common stock on December 31, 1998 as
determined by our board of directors. Amounts reflected are based on the
value of $0.96 per share, minus the per share exercise price, multiplied by
the number of shares underlying the option.
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<PAGE> 43
STOCK PLANS
1996 STOCK PLAN AND 1997 STOCK PLAN
Our 1996 Stock Plan was adopted by our board of directors in January 1996.
This plan provides for the grant of incentive stock options to our employees and
nonstatutory stock options and stock purchase rights to our employees, directors
and consultants. We have reserved an aggregate of 1,153,444 shares of common
stock for issuance under this plan. As of June 30, 1999, 850,747 shares had been
issued pursuant to the exercise of options and stock purchase rights and options
to purchase 181,475 shares of common stock were outstanding. 121,222 shares were
available for future grant. We will not grant any additional stock options under
our 1996 Stock Plan. Instead, we will grant options under our 1997 Stock Plan.
Our 1997 Stock Plan was adopted by our board of directors in January 1997.
This plan provides for the grant of incentive stock options to our employees and
nonstatutory stock options and stock purchase rights to our employees, directors
and consultants. As of June 30, 1999, 5,055,556 shares of common stock were
reserved for issuance under this plan. Of these shares, 1,738,058 had been
issued upon exercise of stock options or stock purchase rights, 1,487,471 shares
were subject to outstanding options or stock purchase rights and 1,830,027
shares were available for future grant.
The number of shares reserved for issuance under the 1997 Stock Plan will
increase by the following:
- 121,222 shares which were reserved but unissued under the our 1996 Stock
Plan;
- any shares returned to the 1996 Stock Plan as a result of termination of
options or repurchase of stock purchase rights issued under the 1996
Plan; and
- beginning in fiscal year 2000, an annual increase equal to the lesser of
1.5 million shares, 4% of the outstanding shares on the date of the
annual increase, or a lesser amount determined by our board of directors.
The compensation committee of our board of directors administers the stock
plan and determines the terms of options granted, including the exercise price,
the number of shares subject to individual option awards and the vesting period
of options. The exercise price of nonstatutory options must generally be at
least 85% of the fair market value of the common stock on the date of grant. The
exercise price of incentive stock options cannot be lower than 100% of the fair
market value of the common stock on the date of grant and, in the case of
incentive stock options granted to holders of more than 10% of our voting power,
not less than 110% of the fair market value. The term of an incentive stock
option cannot exceed 10 years, and the term of an incentive stock option granted
to a holder of more than 10% of our voting power cannot exceed five years.
Options granted under our stock plan will accelerate and become fully
vested in the event we are acquired, unless the successor corporation assumes or
substitutes other options in their place. Our board of directors may not,
without the adversely affected optionee's prior written consent, amend, modify
or terminate the stock plan if the amendment, modification or termination would
impair the rights of optionees. Our stock plan will terminate in 2007 unless
terminated earlier by the board of directors.
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<PAGE> 44
1999 EMPLOYEE STOCK PURCHASE PLAN
Our board of directors adopted our 1999 Employee Stock Purchase Plan in
September 1999. This plan provides our employees with an opportunity to purchase
our common stock through accumulated payroll deductions.
A total of 300,000 shares of common stock has been reserved for issuance
under the purchase plan. In addition, the purchase plan provides for annual
increases in the number of shares available for issuance under the purchase plan
on the first day of each fiscal year, beginning with fiscal 2000, equal to the
lesser of 1% of the outstanding shares of common stock on the first day of the
fiscal year or 350,000 shares or such lesser amount as may be determined by the
board.
The board of directors or a committee appointed by the board administers
the purchase plan. The board or its committee has full and exclusive authority
to interpret the terms of the purchase plan and determine eligibility.
Employees are eligible to participate if they are customarily employed by
us or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year. However, an employee may not be granted an
option to purchase stock under the purchase plan if such an employee:
- immediately after grant owns stock possessing five percent or more of the
total combined voting power or value of all classes of the capital stock
of ours, or
- whose rights to purchase stock under all employee stock purchase plans of
ours accrues at a rate which exceeds $25,000 worth of stock for each
calendar year.
The purchase plan, which is intended to qualify under Section 423 of the
Internal Revenue Code of 1986, as amended, contains consecutive, overlapping
24-month offering periods. Each offering period includes four six-month purchase
periods. The offering periods generally start on the first trading day on or
after May 1 and November 1 of each year, except for the first such offering
period which will commence on the first trading day on or after the effective
date of this offering and will end on the last trading day on or before October
31, 2001.
The purchase plan permits participants to purchase common stock through
payroll deductions of up to 10.0% of the participant's "compensation."
Compensation is defined as the participant's base straight time gross earnings
and commissions but excludes payments for overtime, shift premium payments,
incentive compensation, incentive payments, bonuses and other compensation. The
maximum number of shares a participant may purchase during a single offering
period is 5,000 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of stock
purchased under the purchase plan is 85.0% of the lower of the fair market value
of the common stock at the beginning or end of the offering period. If the fair
market value at the end of a purchase period is less than the fair market value
at the beginning of the offering period, participants will withdraw from the
current offering period following the exercise and will automatically re-enroll
in a new offering period. Participants may end their participation at any time
during an offering period, and they will be paid their payroll deductions to
date. Participation ends automatically upon termination of employment with us.
A participant may not transfer rights granted under the purchase plan other
than by will, the laws of descent and distribution or as otherwise provided
under the purchase plan.
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<PAGE> 45
The purchase plan provides that, if we merge with or into another
corporation or a sale of substantially all of our assets, a successor
corporation may assume or substitute for each outstanding purchase right. If the
successor corporation refuses to assume or substitute for the outstanding
purchase rights, the offering period then in progress will be shortened, and a
new exercise date will be set.
The purchase plan will terminate in 2009. However, the board of directors
has the authority to amend or terminate the purchase plan, except that, subject
to some exceptions described in the purchase plan, no such action may adversely
affect any outstanding rights to purchase stock under the purchase plan.
401(K) PLAN
In July 1997, our board of directors adopted a Retirement Savings and
Investment Plan covering our full-time employees located in the United States.
This plan is intended to qualify under Section 401(k) of the Internal Revenue
Code of 1986, as amended, so that contributions to this plan by employees, and
the investment earnings thereon, are not taxable to employees until withdrawn.
Pursuant to this plan, employees may elect to reduce their current compensation
by up to the lesser of 20% of their annual compensation or the statutorily
prescribed annual limit ($10,000 in 1999) and to have the amount of such
reduction contributed to this plan. We do not currently make additional matching
contributions on behalf of plan participants.
CHANGE OF CONTROL AGREEMENTS
We have entered into change of control agreements with Steven D. Goldby,
Isy Goldwasser, W. Henry Weinberg and Jeryl L. Hilleman. In the event of a
change of control of Symyx (as defined in the agreements) and the actual or
constructive termination of employment, without cause, of the executive within
18 months following the change of control, all outstanding stock options issued
to the executive will be accelerated and all of our rights to repurchase their
restricted stock will lapse. Under these agreements, constructive termination of
employment means the executive's resignation following a reduction in salary, a
material reduction in employment-related responsibilities or a requirement to
relocate outside the Silicon Valley area.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for the following:
- any breach of their duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
- any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
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<PAGE> 46
Our certificate of incorporation and bylaws provide that we shall indemnify
our directors and executive officers and may indemnify our other officers and
employees and other agents to the fullest extent permitted by law. We believe
that indemnification under our bylaws covers at least negligence and gross
negligence on the part of indemnified parties. Our bylaws also permit us to
secure insurance on behalf of any officer, director, employee or other agent for
any liability arising out of his or her actions in such capacity, regardless of
whether the bylaws would permit indemnification.
We have entered into agreements to indemnify our directors, executive
officers and controller, in addition to indemnification provided for in our
bylaws. These agreements, among other things, provide for indemnification of our
directors and executive officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in our rights, arising out
of such person's services as a director or executive officer to us, any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified persons as directors and executive
officers.
45
<PAGE> 47
RELATED PARTY TRANSACTIONS
PREFERRED STOCK FINANCINGS
In February 1996, Symyx issued to one investor a total of 1,000,000 shares
of Series A preferred stock at a purchase price of $0.50 per share. In May 1996,
we issued to various investors a total of 8,600,687 shares of Series B preferred
stock at a purchase price of $1.50 per share. In July 1997, we issued to various
investors a total of 6,750,284 shares of Series C preferred stock at a purchase
price of $3.00 per share. In March, April, October and November 1998, we issued
to various investors a total of 4,210,185 shares of Series D preferred stock at
a purchase price of $4.50 per share.
The table below sets forth the directors and holders of more than 5% of our
outstanding stock who invested in, or are beneficial owners of our preferred
stock. The numbers in the table below are on an as converted to common stock
basis at a conversion ratio of 0.7778 shares of common stock for each share of
preferred stock.
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------------------------------------
PREFERRED STOCKHOLDER SERIES A SERIES B SERIES C SERIES D
--------------------- -------- --------- -------- --------
<S> <C> <C> <C> <C>
Holders of More than 5%:
Institutional Venture Partners
Entities........................ -- 1,555,555 842,591 207,406
Venrock Associates Entities........ -- 1,037,036 518,517 120,987
Directors:
Thomas R. Baruch................... -- 272,222 136,111 172,839
Samuel D. Colella.................. -- 1,555,555 842,591 207,406
Baron Gaulthaus Kraijenhoff........ -- 50,555 25,277 9,202
Peter G. Schultz, Ph.D............. 194,444 -- 77,777 --
Isaac Stein........................ 116,665 38,888 19,444 --
</TABLE>
Holders of our preferred stock are entitled to registration rights with
respect to the shares of common stock that they will hold following this
offering. See "Description of Capital Stock -- Registration Rights."
LOANS TO OFFICERS
We have implemented a program under which our directors, executive officers
and a number of other key employees are permitted to exercise their outstanding
options as to both vested and unvested shares, with unvested shares being
subject to a right of repurchase at cost in favor of Symyx in the event of
termination of employment prior to vesting of all shares. Under this program,
the participants paid the exercise price for their outstanding options pursuant
to full recourse promissory notes. The notes bear interest at rates between 4.6%
and 6.0% per annum and are due and payable on the earlier of 120 days after
termination of the participant's employment with us, or on various dates
beginning in February 2003. The principal amounts of each note payable by a
director or executive officer are set forth below:
<TABLE>
<CAPTION>
DIRECTOR OR EXECUTIVE OFFICER NOTE AMOUNT
----------------------------- -----------
<S> <C>
Steven D. Goldby.................................. $303,750
Isy Goldwasser.................................... $ 50,000
W. Henry Weinberg, Ph.D........................... $ 80,000
Jeryl L. Hilleman................................. $ 13,500
</TABLE>
46
<PAGE> 48
In addition, in January 1998, we lent $300,000 to W. Henry Weinberg, Ph.D.
in connection with his employment with us to assist him with relocation
expenses. This loan did not bear interest. Dr. Weinberg repaid this loan in full
in July 1998.
PAYMENTS TO OFFICERS
Since 1996, we have made the following housing allowance and relocation
payments to W. Henry Weinberg, Ph.D. in connection with his employment with us:
- in 1996, $72,592;
- in 1997, $70,752;
- in 1998, $211,120; and
- through June 30, 1999, $35,000.
OTHER TRANSACTIONS
Mario M. Rosati, one of our directors, is also a member of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, which has served as our outside
corporate counsel since our formation.
POLICY REGARDING TRANSACTIONS WITH AFFILIATES
It is our policy that future transactions with affiliates, including any
loans we make to our officers, directors, principal stockholders or other
affiliates will be on terms no less favorable to us than we could have obtained
from unaffiliated third parties. These transactions will be approved by a
majority of our board of directors, including a majority of the independent and
disinterested members or, if required by law, a majority of our disinterested
stockholders.
47
<PAGE> 49
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock, as of June 30, 1999, by the following individuals
or groups:
- each person, or group of affiliated persons, whom we know beneficially
owns more than 5% of our outstanding stock;
- each of our executive officers;
- each of our directors; and
- all of our directors and executive officers as a group.
Unless otherwise indicated, the address for each stockholder on this table
is c/o Symyx Technologies, Inc., 3100 Central Expressway, Santa Clara,
California 95051. Except as otherwise noted, and subject to applicable community
property laws, to the best of our knowledge, the persons named in this table
have sole voting and investing power for all of the shares of common stock held
by them.
This table lists applicable percentage ownership based on 23,089,046 shares
of common stock outstanding as of June 30, 1999, as adjusted to reflect the
conversion of all outstanding shares of preferred stock upon the closing of this
offering, and also lists applicable percentage ownership based on
shares of common stock outstanding after completion of this
offering. Options to purchase shares of our common stock that are exercisable
within 60 days of June 30, 1999 are deemed to be beneficially owned by the
persons holding these options for the purpose of computing percentage ownership
of that person, but are not treated as outstanding for the purpose of computing
any other person's ownership percentage. All of these options are immediately
exercisable for common stock that would be subject to repurchase by us. Shares
underlying options that are deemed beneficially owned are listed in this table
separately in the column labeled "Shares Subject to Options." These shares are
included in the number of shares listed in the column labeled "Total Number."
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------------------------------------
TOTAL SHARES SUBJECT PERCENT BEFORE PERCENT AFTER
BENEFICIAL OWNER NUMBER TO OPTIONS OFFERING OFFERING
---------------- --------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
Institutional Venture Partners
Entities(1)................. 2,897,216 -- 12.55% %
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Venrock Associates
Entities(2)................. 1,695,983 -- 7.35
30 Rockefeller Plaza, Room
5508
New York, NY 10122
</TABLE>
48
<PAGE> 50
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------------------------------------
TOTAL SHARES SUBJECT PERCENT BEFORE PERCENT AFTER
BENEFICIAL OWNER NUMBER TO OPTIONS OFFERING OFFERING
---------------- --------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
EXECUTIVE OFFICERS AND
DIRECTORS:
Steven D. Goldby(3)........... 493,888 38,888 2.14
Isy Goldwasser................ 435,554 69,999 1.88
W. Henry Weinberg, Ph.D....... 719,443 38,888 3.11
Jeryl L. Hilleman(4).......... 252,775 38,888 1.09
Thomas R. Baruch(5)........... 604,505 23,333 2.62
Samuel D. Colella(6).......... 2,897,216 -- 12.55
Martin Gerstel................ 77,777 -- * *
Baron Gaulthaus Kraijenhoff... 123,922 -- * *
Francois A. L'Eplattenier..... 38,888 -- * *
Kenneth J. Nussbacher......... 77,777 -- * *
Mario M. Rosati(7)............ 77,777 -- * *
Peter G. Schultz, Ph.D.(8).... 1,205,553 -- 5.22
Isaac Stein(9)................ 431,664 23,333 1.87
All directors and executive
officers as a group (13
persons).................... 7,436,739 233,329 31.89% %
</TABLE>
- -------------------------
* Less than 1% of the outstanding shares of common stock.
(1) Includes 2,723,387 shares held by Institutional Venture Partners VI, L.P.,
57,942 shares held by Institutional Venture Management VI, L.P. and 115,887
shares held by IVP Founders Fund I, L.P.
(2) Includes 1,030,942 shares held by Venrock Associates and 665,041 shares
held by Venrock Associates II, L.P.
(3) Includes 455,000 shares held by the Steven Goldby and Florence Goldby
Trust, of which Mr. Goldby is trustee.
(4) Includes 198,334 shares held by Jeryl L. Hilleman and William A. Albright,
Jr. as trustees of the Hilleman/Albright Family Trust. Also includes 3,888
shares held by Craig Albright as trustee of the Colin M. Albright 1991
Trust Agreement dated October 3, 1991, 7,777 shares held by Craig Albright
as trustee of the Caroline V. Albright 1995 Trust Agreement dated April 24,
1995, and 3,888 shares held by Craig Albright as trustee of the Evan M.
Albright 1991 Trust Agreement dated October 3, 1991. Ms. Hilleman disclaims
beneficial ownership of an aggregate of 15,553 shares held in trust for the
benefit of her children.
(5) Includes 408,333 shares held by Chemicals and Materials Enterprise
Associates Limited Partnership and 172,839 shares held by CMEA Life
Sciences Fund, L.P. Mr. Baruch is a general partner of each of these
entities and disclaims beneficial ownership of these shares, except to the
extent of his proportionate partnership interest therein.
(6) Includes 2,723,387 shares held by Institutional Venture Partners VI, L.P.,
57,942 shares held by Institutional Venture Management VI, L.P. and 115,887
shares held by IVP Founders Fund I, L.P. Mr. Colella is a general partner
of each of these entities and disclaims beneficial ownership of these
shares except to the extent of his individual partnership interests
therein.
(7) Includes 70,000 shares held by WS Investment Company 95A. Mr. Rosati is a
general partner of this entity and disclaims beneficial ownership of the
shares held by it, except to the extent of his proportionate partnership
interest therein.
49
<PAGE> 51
(8) Includes 388,888 shares held by George E. Schultz as trustee of the Schultz
Children's Trust. Dr. Schultz disclaims beneficial ownership of these
shares.
(9) Includes 311,111 shares held by the Isaac Stein and Madeline Johnson Stein
Revocable Trust, of which Mr. Stein is a trustee, and 19,444 shares held by
Stein Partners, of which Mr. Stein is a general partner. Also includes
38,888 shares held by Paul Escobosa as trustee of the Joshua Borden Stein
Trust Two dated December 11, 1989, and 38,888 shares held by Paul Escobosa
as trustee of the Sarah Elizabeth Stein Trust Two. Mr. Stein disclaims
beneficial ownership of an aggregate of 77,776 shares held in trust for the
benefit of his children.
50
<PAGE> 52
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our certificate of incorporation that becomes effective upon the closing of
this offering authorizes the issuance of 100,000,000 shares of common stock,
$0.001 par value, and authorizes the issuance of 10,000,000 shares of
undesignated preferred stock, no par value. From time to time, our board of
directors may establish the rights and preferences of the preferred stock. As of
June 30, 1999, 23,089,046 shares of common stock were issued and outstanding and
held by approximately 304 stockholders, and options to purchase 1,668,946 shares
of common stock were issued and outstanding and held by approximately 138
optionholders.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders and there are no cumulative
voting rights. Subject to preferences that may be applicable to any outstanding
preferred stock, holders of common stock are entitled to receive ratably the
dividends, if any, that are declared from time to time by the board of directors
out of funds legally available for that purpose. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of Symyx, the holders of
common stock are entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable. The rights,
preferences and privileges of the holders of common stock are subject to, and
may be adversely affected by, the rights of the holders of shares of any series
of preferred stock that we may designate in the future.
PREFERRED STOCK
The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of this preferred stock. However, the effects
might include, among other things:
- restricting dividends on the common stock;
- diluting the voting power of the common stock;
- impairing the liquidation rights of the common stock; or
- delaying or preventing a change in control of Symyx without further
action by the stockholders.
Upon the closing of this offering, no shares of preferred stock will be
outstanding, and we have no present plans to issue any shares of preferred
stock.
51
<PAGE> 53
REGISTRATION RIGHTS
Pursuant to a registration and information rights agreement entered into
between us and holders of 15,991,849 shares of common stock issuable upon
conversion of our Series A, Series B, Series C and Series D preferred stock, we
are obligated, under limited circumstances and subject to specified conditions
and limitations, to use our best efforts to register the registrable shares.
We must use our best efforts to register shares of the registrable shares:
- if we receive written notice from holders of 40% or more of the
registrable shares requesting that we effect a registration with respect
to not less than 80% of the registrable shares then held by the holders
requesting registration (or a lesser percentage where the reasonably
anticipated price to the public of the sale of the registrable shares
will exceed $10,000,000);
- if we decide to register our own securities (except in connection with
this offering); or
- if (1) we receive written notice from any holder or holders of the
registrable shares requesting that we effect a registration on Form S-3
(a shortened form of registration statement) with respect to shares of
the registrable shares, the reasonably anticipated price to the public of
which exceeds $500,000 and (2) we are then eligible to use Form S-3
(which at the earliest will occur twelve calendar months after the
closing of this offering).
However, in addition to certain other conditions and limitations, if
requested to register shares of registrable shares, we can delay registration
not more than once in any 12-month period and for not more than 90 days.
These registration rights terminate with respect to each registrable share
upon the first to occur of when the holder can transfer his or her registrable
shares pursuant to Rule 144 or five years after the closing of this offering. In
addition, the holders of these registration rights have entered into lockup
agreements and waived their registration rights until 180 days following this
offering.
ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BYLAWS
Provisions of Delaware law and our certificate of incorporation and bylaws
could make the following more difficult:
- the acquisition of Symyx by means of a tender offer;
- the acquisition of Symyx by means of a proxy contest or otherwise; or
- the removal of our incumbent officers and directors.
These provisions, summarized below, are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids. These
provisions are also designed to encourage persons seeking to acquire control of
Symyx to negotiate first with our board. We believe that the benefits of
increased protection of its potential ability to negotiate with the proponent of
an unfriendly or unsolicited proposal to acquire or restructure Symyx outweigh
the disadvantages of discouraging these proposals because negotiation of any
proposals of this type could result in an improvement of their terms.
Election and Removal of Directors. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term,
with our stockholders
52
<PAGE> 54
electing one class each year. See "Management -- Board of Directors." This
system of electing and removing directors may tend to discourage a third party
from making a tender offer or otherwise attempting to obtain control of Symyx,
because it generally makes it more difficult for stockholders to replace a
majority of the directors.
Stockholder Meetings. Under our bylaws, only the board of directors, the
chairman of the board or the president may call special meetings of
stockholders.
Requirements for Advance Notification of Stockholder Nominations and
Proposals. Our bylaws establish advance notice procedures for stockholder
proposals and for the nomination of candidates for election as directors, other
than nominations made by or at the direction of the board of directors or a
committee of the board.
Delaware Antitakeover Law. Symyx is subject to Section 203 of the Delaware
General Corporation Law, an antitakeover law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date
the person became an interested stockholder, unless the business combination or
the transaction in which the person became an interested stockholder is approved
in the manner specified in Section 203. Generally, a business combination
includes a merger, asset or stock sale, or other transaction resulting in a
financial benefit to the interested stockholder. Generally, an interested
stockholder is a person who, together with affiliates and associates, owns or
within three years prior to the determination of interested stockholder status
did own 15% or more of a corporation's voting stock. The existence of this
provision may have an antitakeover effect by discouraging takeover attempts not
approved in advance by the board of directors, that might result in a premium
over the market price for the shares of common stock held by stockholders.
Elimination of Stockholder Action by Written Consent. Our certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting.
No Cumulative Voting. Our certificate of incorporation and bylaws do not
provide for cumulative voting in the election of directors.
Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of Symyx. These and other provisions may have the
effect of deferring hostile takeovers or delaying changes in control or
management of Symyx.
Amendment of Charter Provisions. The amendment of any of the above
provisions would require approval by holders of at least 66 2/3% of the
outstanding common stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is .
LISTING
We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "SMMX."
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<PAGE> 55
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock, and
we cannot assure you that a significant public market for the common stock will
develop or be sustained after this offering. Future sales of substantial amounts
of common stock, including shares issued upon exercise of outstanding options
and warrants, in the public market following this offering could adversely
affect market prices prevailing from time to time and could impair our ability
to raise capital through sale of our equity securities. As described below, no
shares currently outstanding will be available for sale immediately after this
offering because of contractual resale restrictions contained in agreements
between us and our stockholders.
Upon completion of this offering, we will have outstanding
shares of common stock based upon shares outstanding as of June
30, 1999, assuming no exercise of the underwriters' over-allotment option and no
exercise of outstanding options prior to completion of this offering. Of these
shares, the shares sold in this offering will be freely tradable
without restriction under the Securities Act, except for any shares purchased by
our "affiliates" as defined in Rule 144 under the Securities Act. Of the
remaining 23,089,046 shares of common stock, 23,089,046 shares held by existing
stockholders are subject to lock-up agreements with the underwriters and/or us
providing that the stockholder will not offer to sell, contract to sell or
otherwise sell, dispose of, loan, pledge or grant any rights to, any shares of
common stock or any securities that are convertible into common stock, owned as
of the date of this prospectus or subsequently acquired, for a period of 180
days after the date of this prospectus without the prior written consent of
Credit Suisse First Boston. As a result of these lock-up agreements,
notwithstanding possible earlier eligibility for sale under the provisions of
Rules 144, 144(k) and 701 under the Securities Act, none of these shares will be
resellable until 181 days after the date of this prospectus. Credit Suisse First
Boston may, in its sole discretion and at any time without notice, release all
or any portion of the shares subject to lock-up agreements.
Beginning 181 days after the date of this prospectus, approximately
22,944,263 shares will be eligible for sale in the public market. All of these
shares will be subject to volume limitations under Rule 144, except
shares eligible for sale under Rule 144(k) and
shares eligible for sale under Rule 701. In some cases, these shares are subject
to repurchase rights of Symyx.
In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year, including the holding period of any prior owner
and except an affiliate, would be entitled to sell within any three-month period
a number of shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this
offering; or
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144.
Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about Symyx. Under Rule 144(k), a person who is not deemed to have been an
affiliate of Symyx at any time during the three months preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years
including the holding period of any prior owner
54
<PAGE> 56
except an affiliate, is entitled to sell those shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirement, of Rule 144. Any employee, officer or director of or
consultant to Symyx who purchased shares pursuant to a written compensatory plan
or contact may be entitled to rely on the resale provisions of Rule 701. Rule
701 permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell their Rule 701 shares in reliance on Rule
144 without having to comply with the holding period, public information, volume
limitation or notice provisions of Rule 144. All holders of Rule 701 shares are
required to wait until 90 days after the date of this prospectus before selling
their Rule 701 shares. However, all Rule 701 shares are subject to lock-up
agreements and will only become eligible for sale at the earlier of the
expiration of the 180-day lock-up agreements or the receipt of the written
consent of Credit Suisse First Boston more than 90 days after the date of this
prospectus.
After this offering, we intend to file a registration statement on Form S-8
registering shares of common stock subject to outstanding options or reserved
for future issuance under our employee benefit plans. As of June 30, 1999,
options to purchase a total of 1,668,946 shares were outstanding and 1,951,249
shares were reserved for future issuance under our stock plans. Common stock
issued upon exercise of outstanding vested options or issued pursuant to our
employee stock purchase plan, other than common stock issued to our affiliates,
will be available for immediate resale in the open market following expiration
of the 180-day lock-up agreements.
Also beginning six months after the date of this offering, holders of
15,991,849 restricted shares will be entitled to registration rights on these
shares for sale in the public market. See "Description of Capital
Stock -- Registration Rights." Registration of these shares under the Securities
Act would result in their becoming freely tradable without restriction under the
Securities Act immediately upon the effectiveness of the registration.
55
<PAGE> 57
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 1999, we have agreed to sell to the
underwriters named below, for whom Credit Suisse First Boston Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation, Invemed Associates LLC and
Schroder & Co. Inc. are acting as representatives, the following respective
numbers of shares of common stock:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Invemed Associates LLC......................................
Schroder & Co. Inc. ........................................
---------
Total.............................................
=========
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares of common stock at the initial
public offering price less the underwriting discounts and commissions. The
option may be exercised only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation we will pay:
<TABLE>
<CAPTION>
PER SHARE TOTAL
------------------------------- -------------------------------
WITHOUT WITH WITHOUT WITH
OVER-ALLOTMENT OVER-ALLOTMENT OVER-ALLOTMENT OVER-ALLOTMENT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting Discounts and
Commissions paid by us... $ $ $ $
</TABLE>
We estimate that our out-of-pocket expenses for this offering will be
approximately $1 million.
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We, our executive officers, directors and our existing stockholders have
agreed that we will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Securities and Exchange
Commission a registration statement under the Securities Act relating to, any
additional shares of our common stock or securities convertible into or
exchangeable or exercisable for any of our common stock, or publicly disclose
the intention to make any such offer, sale, pledge, disposition or filing,
without the
56
<PAGE> 58
prior written consent of Credit Suisse First Boston Corporation for a period of
180 days after the date of this prospectus.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be required
to make in that respect.
We have made application to list the shares of common stock on The Nasdaq
Stock Market's National Market under the symbol "SMMX."
Prior to this offering, there has been no public market for our common
stock. The initial public offering price was determined by negotiation between
us and the underwriters. The principal factors considered in determining the
public offering price included:
- the history of and prospects for the industry in which we will compete;
- the ability of our management;
- our prospects for our future earnings;
- the present state of our development and our current financial condition;
- the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies; and
- the general condition of the securities markets at the time of this
offering.
We can offer no assurances that the initial public offering price will
correspond to the price at which the common stock will trade in the public
market subsequent to the offering or that an active trading market for the
common stock will develop and continue after the offering.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act:
- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by such
syndicate member is purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on The Nasdaq Stock Market's National Market or otherwise and, if
commenced, may be discontinued at any time.
57
<PAGE> 59
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common stock
in Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom the
purchase confirmation is received that (i) the purchaser is entitled under
applicable provincial securities laws to purchase the common stock without the
benefit of a prospectus qualified under the securities laws, (ii) where required
by law, that the purchaser is purchasing as principal and not as agent, and
(iii) the purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or these persons. All or a substantial portion of the assets of the
issuer and these persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or these persons in
Canada or to enforce a judgment obtained in Canadian courts against the issuer
or these persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser in this offering. This report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from us. Only one report must be filed
in respect of common stock acquired on the same date and under the same
prospectus exemption.
58
<PAGE> 60
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of common stock should consult with their own legal and
tax advisors with respect to the tax consequences of an investment in our common
stock in their particular circumstances and with respect to the eligibility of
our common stock for investment by the purchaser under relevant Canadian
legislation.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Symyx by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Pillsbury Madison & Sutro LLP, Palo Alto, California, is acting as
counsel for the underwriters in connection with selected legal matters relating
to the shares of common stock offered by this prospectus. As of June 30, 1999,
an investment partnership and a member of Wilson Sonsini Goodrich & Rosati
beneficially owned an aggregate of 77,777 shares of common stock of Symyx. Mario
M. Rosati, one of our directors and our secretary, is a member of Wilson Sonsini
Goodrich & Rosati.
EXPERTS
Ernst & Young, LLP, independent auditors, have audited our financial
statements at December 31, 1997 and 1998, and for each of the three years in the
period ended December 31, 1998, as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given upon the authority of
such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1. This prospectus, which forms a part of the Registration
Statement, does not contain all the information included in the Registration
Statement. Certain information is omitted and you should refer to the
Registration Statement and its exhibits. With respect to references made in this
prospectus to any contract or other document of Symyx, such references are not
necessarily complete and you should refer to the exhibits attached to the
Registration Statement for copies of the actual contract or document. You may
review a copy of the Registration Statement, including exhibits and schedule
filed therewith, at the Securities and Exchange Commission's public reference
facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Securities and Exchange
Commission located at 7 World Trade Center, Suite 1300, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may also obtain copies of such materials from the Public
References Section of the Securities and Exchange Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, such as Symyx, that file electronically
with the Securities and Exchange Commission.
59
<PAGE> 61
SYMYX TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statement of Stockholders' Equity........................... F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 62
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Symyx Technologies, Inc.
We have audited the accompanying balance sheets of Symyx Technologies, Inc.
as of December 31, 1997 and 1998, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Symyx Technologies, Inc. at
December 31, 1997 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Palo Alto, California
March 23, 1999, except for
Note 6, as to which the date
is September , 1999
The foregoing report is in the form that will be signed upon the completion
of the stock split described in Note 6 to the financial statements.
/s/ Ernst & Young LLP
Palo Alto, California
September 20, 1999
F-2
<PAGE> 63
SYMYX TECHNOLOGIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
-------------------------- JUNE 30, JUNE 30, 1999
1997 1998 1999 (NOTE 6)
----------- ------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 3,841,237 $ 14,042,755 $ 10,699,094
Short-term investments............................ 10,530,855 9,338,897 6,753,453
Accounts receivable............................... -- 626,088 807,943
Other current assets.............................. 864,387 838,816 1,126,305
----------- ------------ ------------
Total current assets................................ 15,236,479 24,846,556 19,386,795
Property and equipment, net......................... 13,320,423 16,109,920 16,081,713
Long-term investments............................... 6,241,920 11,738,965 24,792,339
Other long-term assets.............................. 62,470 208,025 580,053
----------- ------------ ------------
$34,861,292 $ 52,903,466 $ 60,840,900
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities.... $ 1,887,428 $ 1,676,000 $ 1,013,471
Accrued compensation and employee benefits........ 203,630 416,253 575,852
Deferred rent..................................... 286,988 446,282 462,030
Deferred revenue.................................. 1,883,699 4,171,429 10,130,561
Current portion of equipment and facility loans... 1,114,638 2,435,836 2,996,796
----------- ------------ ------------
Total current liabilities........................... 5,376,383 9,145,800 15,178,710
Equipment and facility loans........................ 4,454,943 7,591,793 7,817,929
Commitments
Stockholders' equity:
Preferred stock, $0.001 par value, 23,650,000 shares
authorized, issuable in series:
Series A convertible, 1,000,000 shares designated,
issued and outstanding (no shares outstanding
pro forma); aggregate liquidation preference of
$500,000........................................ 500,000 500,000 1,000 $ --
Series B convertible, 8,650,000 shares designated,
8,600,687 shares issued and outstanding (no
shares outstanding pro forma); aggregate
liquidation preference of $12,901,030........... 12,869,171 12,869,171 8,601 --
Series C convertible, 8,000,000 shares designated,
6,750,284 shares issued and outstanding (no
shares outstanding pro forma); aggregate
liquidation preference of $20,250,852........... 20,231,584 20,231,584 6,750 --
Series D convertible, 6,000,000 shares designated,
4,210,185 shares issued and outstanding (no
shares outstanding pro forma); aggregate
liquidation preference of $18,945,832........... -- 18,909,685 4,210 --
Common stock, $0.001 par value, 50,000,000 shares
authorized, 3,759,772, 6,225,475 and 7,097,197
shares issued and outstanding at December 31,
1997, December 31, 1998 and June 30, 1999,
respectively (23,089,046 shares outstanding pro
forma)............................................ 205,073 849,347 7,097 23,089
Class B common stock, no par value, no shares
authorized, issued and outstanding (93,333 shares
at December 31, 1997)............................. 1,200 -- -- --
Additional paid-in capital.......................... -- 559,556 57,672,650 57,677,219
Stockholder notes receivable........................ -- (397,750) (749,800) (749,800)
Deferred stock compensation......................... -- (442,217) (1,879,229) (1,879,229)
Unrealized gain (loss) on investments............... 7,891 (43,823) (123,351) (123,351)
Accumulated deficit................................. (8,784,953) (16,869,680) (17,103,667) (17,103,667)
----------- ------------ ------------ ------------
Total stockholders' equity.......................... 25,029,966 36,165,873 37,844,261 $ 37,844,261
----------- ------------ ------------ ============
Total liabilities and stockholder's equity.......... $34,861,292 $ 52,903,466 $ 60,840,900
=========== ============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 64
SYMYX TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue from
collaborations............. $ -- $ 4,806,301 $13,786,836 $ 6,383,033 $14,672,179
Operating costs and expenses:
Research and development..... 2,482,776 8,763,679 17,639,884 7,938,342 10,634,095
General and administrative... 567,377 2,129,285 4,500,462 2,272,563 2,996,823
Amortization of deferred
compensation............... -- -- 117,339 -- 1,688,290
----------- ----------- ----------- ----------- -----------
Total operating expenses..... 3,050,153 10,892,964 22,257,685 10,210,905 15,319,208
----------- ----------- ----------- ----------- -----------
Income (loss) from
operations................. (3,050,153) (6,086,663) (8,470,849) (3,827,872) (647,029)
Interest income.............. 374,733 842,853 1,117,514 536,303 962,257
Interest and other expense... (5,763) (351,725) (731,392) (378,188) (549,215)
----------- ----------- ----------- ----------- -----------
Net income (loss)............ $(2,681,183) $(5,595,535) $(8,084,727) $(3,669,757) $ (233,987)
=========== =========== =========== =========== ===========
Basic and diluted net loss
per share.................. $ (1.24) $ (1.97) $ (2.11) $ (1.04) $ (0.04)
=========== =========== =========== =========== ===========
Shares used in computing
basic and diluted net loss
per share.................. 2,168,095 2,844,646 3,829,060 3,524,373 5,382,399
=========== =========== =========== =========== ===========
Pro forma basic and diluted
net loss per share
(unaudited)................ $ (0.46) $ (0.01)
=========== ===========
Shares used in computing pro
forma basic and diluted net
loss per share
(unaudited)................ 17,736,765 21,374,248
=========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 65
SYMYX TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL STOCKHOLDER DEFERRED
------------------------- ----------------------- PAID-IN NOTES STOCK
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE COMPENSATION
---------- ------------ --------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995....... -- $ -- 2,076,666 $ 2,670 $ -- $ -- $ --
Issuance of common stock........... -- -- 1,231,362 99,228 -- -- --
Issuance of Class B common stock... -- -- 116,666 1,500 -- -- --
Issuance of Series A preferred
stock upon conversion of loan from
officer........................... 1,000,000 500,000 -- -- -- -- --
Issuance of Series B preferred
stock for cash, net of issuance
costs of $31,860.................. 8,600,687 12,869,171 -- -- -- -- --
Net loss and comprehensive loss for
year ended December 31, 1996...... -- -- -- -- -- -- --
---------- ------------ --------- ----------- ----------- --------- -----------
Balance at December 31, 1996....... 9,600,687 13,369,171 3,424,694 103,398 -- -- --
Issuance of common stock........... -- -- 471,188 103,425 -- -- --
Issuance of Series C preferred
stock for cash, net of issuance
costs of $19,268.................. 6,750,284 20,231,584 -- -- -- -- --
Repurchase of common stock (19,444
shares) and Class B common stock
(23,333 shares)................... -- -- (42,777) (550) -- -- --
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities... -- -- -- -- -- -- --
Net loss for the year ended
December 31, 1997............... -- -- -- -- -- -- --
Comprehensive loss................ -- -- -- -- -- -- --
---------- ------------ --------- ----------- ----------- --------- -----------
Balance at December 31, 1997....... 16,350,971 33,600,755 3,853,105 206,273 -- -- --
Issuance of Series D preferred
stock for cash, net of issuance
costs of $36,148.................. 4,143,518 18,609,685 -- -- -- -- --
Issuance of common stock........... -- -- 1,532,370 643,074 -- (397,750) --
Conversion of Class B common stock
to common stock on a 1:10 basis... -- -- 840,000 -- -- -- --
Issuance of Series D preferred
stock as consideration for
technology rights................. 66,667 300,000 -- -- -- -- --
Deferred stock compensation........ -- -- -- -- 559,556 -- (559,556)
Amortization of deferred stock
compensation...................... -- -- -- -- -- -- 117,339
Comprehensive loss:
Net loss for the year ended
December 31,1998................ -- -- -- -- -- -- --
Unrealized gain (loss) on
available-for-sale securities... -- -- -- -- -- -- --
Comprehensive income (loss)....... -- -- -- -- -- -- --
---------- ------------ --------- ----------- ----------- --------- -----------
Balance at December 31, 1998....... 20,561,156 52,510,440 6,225,475 849,347 559,556 (397,750) (442,217)
Issuance of common stock........... -- -- 871,722 655,663 -- (352,050) --
Deferred stock compensation
(unaudited)....................... -- -- -- -- 3,125,302 -- (3,125,302)
Amortization of deferred stock
compensation (unaudited).......... -- -- -- -- -- -- 1,688,290
Reincorporation in Delaware........ -- (52,489,879) -- (1,497,913) 53,987,792 -- --
Comprehensive loss:
Net loss for the six months ended
June 30, 1999 (unaudited)....... -- -- -- -- -- -- --
Unrealized gain (loss) on
available-for-sale securities
(unaudited)..................... -- -- -- -- -- -- --
Comprehensive income (loss)
(unaudited)..................... -- -- -- -- -- -- --
---------- ------------ --------- ----------- ----------- --------- -----------
Balance at June 30, 1999
(unaudited)....................... 20,561,156 $ 20,561 7,097,197 $ 7,097 $57,672,650 $(749,800) $(1,879,229)
========== ============ ========= =========== =========== ========= ===========
<CAPTION>
UNREALIZED
GAIN TOTAL
(LOSS) ON ACCUMULATED STOCKHOLDERS'
INVESTMENTS DEFICIT EQUITY
----------- ------------ -------------
<S> <C> <C> <C>
Balance at December 31, 1995....... $ -- $ (508,235) $ (505,565)
Issuance of common stock........... -- -- 99,228
Issuance of Class B common stock... -- -- 1,500
Issuance of Series A preferred
stock upon conversion of loan from
officer........................... -- -- 500,000
Issuance of Series B preferred
stock for cash, net of issuance
costs of $31,860.................. -- -- 12,869,171
Net loss and comprehensive loss for
year ended December 31, 1996...... -- (2,681,183) (2,681,183)
--------- ------------ -----------
Balance at December 31, 1996....... -- (3,189,418) 10,283,151
Issuance of common stock........... -- -- 103,425
Issuance of Series C preferred
stock for cash, net of issuance
costs of $19,268.................. -- -- 20,231,584
Repurchase of common stock (19,444
shares) and Class B common stock
(23,333 shares)................... -- -- (550)
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities... 7,891 -- 7,891
Net loss for the year ended
December 31, 1997............... -- (5,595,535) (5,595,535)
-----------
Comprehensive loss................ -- -- (5,587,644)
--------- ------------ -----------
Balance at December 31, 1997....... 7,891 (8,784,953) 25,029,966
Issuance of Series D preferred
stock for cash, net of issuance
costs of $36,148.................. -- -- 18,609,685
Issuance of common stock........... -- -- 245,324
Conversion of Class B common stock
to common stock on a 1:10 basis... -- -- --
Issuance of Series D preferred
stock as consideration for
technology rights................. -- -- 300,000
Deferred stock compensation........ -- -- --
Amortization of deferred stock
compensation...................... -- -- 117,339
Comprehensive loss:
Net loss for the year ended
December 31,1998................ -- (8,084,727) (8,084,727)
Unrealized gain (loss) on
available-for-sale securities... (51,714) -- (51,714)
-----------
Comprehensive income (loss)....... -- -- (8,136,441)
--------- ------------ -----------
Balance at December 31, 1998....... (43,823) (16,869,680) 36,165,873
Issuance of common stock........... -- -- 303,613
Deferred stock compensation
(unaudited)....................... -- -- --
Amortization of deferred stock
compensation (unaudited).......... -- -- 1,688,290
Reincorporation in Delaware........ -- -- --
Comprehensive loss:
Net loss for the six months ended
June 30, 1999 (unaudited)....... -- (233,987) (233,987)
Unrealized gain (loss) on
available-for-sale securities
(unaudited)..................... (79,528) -- (79,528)
-----------
Comprehensive income (loss)
(unaudited)..................... -- -- (313,515)
--------- ------------ -----------
Balance at June 30, 1999
(unaudited)....................... $(123,351) $(17,103,667) $37,844,261
========= ============ ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 66
SYMYX TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1996 1997 1998 1998 1999
----------- ------------ ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............................... $(2,681,183) $ (5,595,535) $ (8,084,727) $(3,669,757) $ (233,987)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization................. 200,334 1,031,258 3,090,533 1,136,823 2,450,012
Deferred compensation amortization............ -- -- 117,339 -- 1,688,290
Issuance of preferred stock as consideration
for technology rights....................... -- -- 300,000 -- --
Common shares issued and contribution of
capital in consideration of services
rendered.................................... 10,000 -- -- -- --
Changes in assets and liabilities:
Other current assets........................ (249,635) (614,752) 25,571 268,612 (287,489)
Accounts receivable......................... -- -- (626,088) (20,000) (181,855)
Accounts payable and other current
liabilities............................... 276,391 1,540,149 (211,428) (1,043,944) (662,530)
Deferred revenue............................ -- 1,883,699 2,287,730 (740,533) 5,959,133
Deferred rent............................... -- 286,988 159,294 143,545 15,748
Accrued compensation and employee
benefits.................................. 43,870 159,760 212,623 243,498 159,599
Other long-term assets...................... (55,119) (7,351) (145,555) (171,414) (372,028)
----------- ------------ ------------ ----------- ------------
Net cash provided by (used in) operating
activities.................................... (2,455,342) (1,315,784) (2,874,708) (3,853,170) 8,534,893
----------- ------------ ------------ ----------- ------------
INVESTING ACTIVITIES
Purchase of property and equipment, net......... (1,329,770) (13,218,044) (5,808,609) (3,537,571) (2,238,978)
Purchase of investments......................... (5,978,859) (35,036,081) (20,053,101) (2,707,714) (14,530,285)
Proceeds from sales of investments.............. -- 12,917,486 1,274,879 1,274,879 --
Proceeds from maturities of investments......... -- 11,332,570 14,350,000 6,000,000 3,800,000
----------- ------------ ------------ ----------- ------------
Net cash provided by (used in) investing
activities.................................... (7,308,629) (24,004,069) (10,236,831) 1,029,594 (12,969,263)
----------- ------------ ------------ ----------- ------------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock, net
of issuance costs............................. 12,869,171 20,231,584 18,609,685 5,483,745 --
Proceeds from issuance of common stock, net of
repurchases................................... 90,728 102,875 245,324 154,252 303,613
Proceeds from loan from officer................. 696,137 -- -- -- --
Repayment of loan from officer.................. (650,000) -- -- -- --
Principal payments on equipment and facility
loans......................................... -- (430,419) (1,166,310) (538,081) (1,238,706)
Proceeds from equipment and facility loans...... -- 6,000,000 5,624,358 -- 2,025,802
----------- ------------ ------------ ----------- ------------
Net cash provided by financing activities....... 13,006,036 25,904,040 23,313,057 5,099,916 1,090,709
----------- ------------ ------------ ----------- ------------
Net increase (decrease) in cash and cash
equivalents................................... 3,242,065 584,187 10,201,518 2,276,340 (3,343,661)
Cash and cash equivalents at beginning of
period........................................ 14,985 3,257,050 3,841,237 3,841,237 14,042,755
----------- ------------ ------------ ----------- ------------
Cash and cash equivalents at end of period...... $ 3,257,050 $ 3,841,237 $ 14,042,755 $ 6,117,577 $ 10,699,094
=========== ============ ============ =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid................................... $ 5,763 $ 406,229 $ 733,077 $ 377,388 $ 549,214
=========== ============ ============ =========== ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Conversion of loan from officer to preferred
stock......................................... $ 500,000 $ -- $ -- $ -- $ --
=========== ============ ============ =========== ============
Exercise of stock options for note
receivables................................... $ -- -- $ 397,750 $ 397,750 $ 352,050
=========== ============ ============ =========== ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 67
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Symyx Technologies, Inc. (the "Company"), was incorporated on September 20,
1994 in the state of California to research, develop, manufacture and market
products through the application of combinatorial technologies in the area of
materials science. In February 1999, the Company completed a reincorporation in
the state of Delaware. To date, the Company's operations have involved research
and development activities, a significant portion of which has been funded by
collaborative partners. The Company does not currently market any products.
INTERIM FINANCIAL INFORMATION
The financial information at June 30, 1999 and for the six months ended
June 30, 1998 and 1999 is unaudited but, in the opinion of management, has been
prepared on the same basis as the annual financial statements and includes all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of the financial position at such
date and the operating results and cash flows for such periods. Results for the
interim period are not necessarily indicative of the results to be expected for
any subsequent six-month period nor for the entire year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from these estimates.
CASH AND CASH EQUIVALENTS, SHORT-TERM AND LONG-TERM INVESTMENTS
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents; investments with
maturities between three and twelve months from the date of purchase are
considered to be short-term investments; investments with maturities greater
than twelve months from the date of purchase are considered to be long-term
investments. By policy, the Company restricts its investments to instruments
with maturities of less than twenty-four months.
The Company invests its excess cash primarily in deposits with banks and
short-term and medium-term marketable securities. These investments primarily
include corporate notes, money market funds and U.S. treasury notes. By policy,
the Company restricts its investments in long-term bank obligations rated "A" or
higher and short-term obligations rated "P1" or higher by Moody's or "A1" or
higher by Standard & Poor's ("S&P"), and corporate obligations, including
intermediate term notes rated "A" or higher and commercial paper rated "P1" or
higher by Moody's, or "A1" or higher by S&P.
F-7
<PAGE> 68
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such determination as of each balance sheet
date. Through June 30, 1999, the Company has classified its entire investment
portfolio as available-for-sale. Available-for-sale securities are carried at
fair value with unrealized gains and losses reported as a separate component of
stockholders' equity. The estimated fair value amounts have been determined by
the Company using available market information and commonly used valuation
methodologies.
The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included
in interest income. Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are also included in
interest income. The cost of securities sold is based on the specific
identification method. Interest and dividends are included in interest income.
The following is a summary of the fair value of available-for-sale
securities:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
U.S. Treasury securities...... $ 400,001 $ -- $ --
Money market funds............ 3,212,210 11,242,137 9,762,099
U.S. Corporate securities..... 13,359,470 21,267,862 31,545,792
----------- ----------- -----------
Total......................... $16,971,681 $32,509,999 $41,307,891
=========== =========== ===========
</TABLE>
Above amounts are included in the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents..... $ 198,906 $11,432,137 $ 9,762,099
Short-term investments........ 10,530,855 9,338,897 6,753,453
Long-term investments......... 6,241,920 11,738,965 24,792,339
----------- ----------- -----------
Total......................... $16,971,681 $32,509,999 $41,307,891
=========== =========== ===========
</TABLE>
Following is a reconciliation of cash and cash equivalents:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1997 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Available-for-sale
securities................... $ 198,906 $11,432,137 $ 9,762,099
Cash and bank accounts......... 3,642,331 2,610,618 936,995
---------- ----------- -----------
Total cash and cash
equivalents.................. $3,841,237 $14,042,755 $10,699,094
========== =========== ===========
</TABLE>
Unrealized gains and losses are not material, and have, therefore, not been
shown separately; however, they have been included as a separate component in
the statement of stockholders' equity. Gross realized gains and losses on sales
of available-for-sale securities were immaterial.
F-8
<PAGE> 69
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method using a life of three to five years. Leasehold improvements
are amortized over the shorter of the lease term or the estimated useful life of
the assets.
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Machinery and equipment....... $ 4,026,939 $ 7,128,440 $ 7,803,390
Computers and software........ 911,380 1,469,014 1,799,187
Leasehold improvements........ 8,442,276 10,412,719 10,569,333
Construction in progress...... 603,623 346,632 961,134
Furniture and fixtures........ 273,103 461,443 483,984
----------- ----------- -----------
14,257,321 19,818,248 21,617,028
Less accumulated depreciation
and amortization............ (936,898) (3,708,328) (5,535,315)
----------- ----------- -----------
Property and equipment, net... $13,320,423 $16,109,920 $16,081,713
=========== =========== ===========
</TABLE>
Equipment which has been collateralized as security for the Company's three
loan agreements is included in property and equipment. At December 31, 1998 and
1997, property and equipment collateralized was $13,180,000 and $6,000,000 with
accumulated depreciation of $3,060,000 and $140,000, respectively. At June 30,
1999, property and equipment collateralized was $15,200,000 with accumulated
depreciation of $4,398,000.
REVENUE RECOGNITION
The Company recognizes revenues from research collaboration agreements and
government grants as earned based upon the performance requirements of the
agreements. Payments received prior to performance are deferred and recognized
as revenue when earned over future performance periods. Collaboration agreements
generally specify minimum levels of research effort required to be performed by
the Company.
RESEARCH AND DEVELOPMENT
Research and development expenditures, including direct and allocated
expenses, are charged to operations as incurred.
STOCK-BASED COMPENSATION
The Company generally grants stock options to its employees for a fixed
number of shares with an exercise price equal to the fair value of the shares on
the date of grant. As allowed under the Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the
Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees"
F-9
<PAGE> 70
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
("APB 25") and related interpretations in accounting for stock awards to
employees. Accordingly, no compensation expense is recognized in the Company's
financial statements in connection with stock options granted to employees at
fair value. Deferred compensation for options granted to employees is determined
as the difference between the deemed fair market value of the Company's common
stock on the date options were granted and the exercise price.
Deferred compensation for options granted to nonemployees has been
determined in accordance with SFAS 123 as the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measured. Deferred compensation for options granted to nonemployees is
periodically remeasured as the underlying options vest.
NET LOSS PER SHARE
Basic and diluted net loss per common share are presented in conformity
with the Statement of Financial Accounting Standards No. 128, "Earnings per
Share," ("SFAS 128") for all periods presented. Following the guidance given by
the Securities and Exchange Commission Staff Accounting Bulletin No. 98, common
stock and convertible preferred stock that has been issued or granted for
nominal consideration prior to the anticipated effective date of the initial
public offering must be included in the calculation of basic and diluted net
loss per common share as if these shares had been outstanding for all periods
presented. To date, the Company has not issued or granted shares for nominal
consideration.
In accordance with SFAS 128, basic and diluted net loss per share has been
computed using the weighted-average number of shares of common stock outstanding
during the period, less shares subject to repurchase. Pro forma basic and
diluted net loss per common share, as presented in the statements of operations,
has been computed for the year ended December 31, 1998 and the six months ended
June 30, 1999 as described above, and also gives effect to the conversion of the
convertible preferred stock which will automatically convert to common stock
immediately prior to the completion of the Company's initial public offering
(using the if-converted method) from the original date of issuance.
F-10
<PAGE> 71
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
The following table presents the calculation of basic, diluted and pro
forma basic and diluted net loss per share (in thousands, except per share
data):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- ------------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net loss.................... $(2,681) $(5,596) $(8,085) $(3,670) $ (234)
======= ======= ======= ======= =======
Basic and diluted:
Weighted-average shares of
common stock
outstanding............ 2,923 3,474 4,659 4,305 6,659
Less: weighted-average
shares subject to
repurchase............. (755) (629) (830) (781) (1,277)
------- ------- ------- ------- -------
Weighted-average shares
used in computing basic
and diluted net loss
per share.............. 2,168 2,845 3,829 3,524 5,382
======= ======= ======= ======= =======
Basic and diluted net loss
per share................. $ (1.24) $ (1.97) $ (2.11) $ (1.04) $ (0.04)
======= ======= ======= ======= =======
Pro forma:
Net loss.................. $(8,085) $ (234)
======= =======
Shares used above......... 3,829 5,382
Pro forma adjustment to
reflect weighted effect
of assumed conversion
of convertible
preferred stock
(unaudited)............ 13,908 15,992
------- -------
Shares used in computing
pro forma basic and
diluted net loss per
share (unaudited)...... 17,737 21,374
======= =======
Pro forma basic and
diluted net loss per
share (unaudited)...... $ (0.46) $ (0.01)
======= =======
</TABLE>
The Company has excluded all convertible preferred stock, convertible class
B common stock, outstanding stock options, and shares subject to repurchase from
the calculation of diluted loss per common share because all such securities are
antidilutive for all applicable periods presented. The total number of shares
excluded from the calculations of diluted net loss per share, prior to
application of the treasury stock method for options, was 9,302,409, 15,558,813
and 18,862,072 for the years ended December 31, 1996, 1997 and 1998,
respectively, and 18,542,863 and 18,980,014 for the six months ended June 30,
1998 and 1999, respectively. Such securities, had they been dilutive, would have
been
F-11
<PAGE> 72
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
included in the computations of diluted net loss per share. See Note 4 for
further information on these securities.
COMPREHENSIVE INCOME (LOSS)
The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income". The only component of other comprehensive
income (loss) is unrealized gains and losses on available-for-sale securities.
Comprehensive loss has been disclosed in the consolidated statement of
stockholders' equity for all periods presented.
SEGMENT REPORTING
Effective in January 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and
Related Information" ("SFAS 131"). SFAS 131 establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major customers.
The Company has determined that it operates in only one segment. Accordingly,
the adoption of this Statement had no impact on the Company's financial
statements.
EFFECT OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which will be effective for the year
ending 2001. This statement establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments imbedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized in earnings
unless specific hedge accounting criteria are met. The Company believes the
adoption of SFAS 133 will not have a material effect on the financial
statements, since it currently does not engage in hedging activities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). "SOP 98-1"
requires that entities capitalize certain costs related to internal-use software
once certain criteria have been met. The adoption of SOP 98-1, as required in
1999, has not had a material impact on the Company's financial position or
results of operations.
2. RESEARCH AND DEVELOPMENT ARRANGEMENTS
In March 1998, the Company entered into a collaboration agreement with
Bayer AG that was subsequently expanded in May 1998, January 1999 and September
1999. The January 1999 portion of the expanded collaboration is a new three year
agreement, the
F-12
<PAGE> 73
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
September 1999 amendment expands the term of the March 1998 agreement through
December 2000. The partnership is focused on the discovery of catalysts,
polymers, and electronic materials. Under the terms of the expanded agreement,
the Company will receive $36,000,000 in guaranteed research funding and up to
$60,000,000 if extended through mutual agreement. In addition, Bayer Innovation,
a corporate venture fund of Bayer AG, has made an initial equity investment of
$5,000,000 in the Company. The Company will also receive royalties or milestone
payments on the sale of any products developed out of the collaboration. During
the year ending December 31, 1998, the Company recognized net revenue of
$5,242,000 in connection with this collaboration. During the six months ended
June 30, 1999, the Company has recognized $4,730,000 in connection with this
collaboration. Revenue in 1997 included $1,042,000 earned under a related
interim agreement with Bayer.
In September 1998, the Company entered into a three-year collaborative
research agreement with Celanese Ltd. ("Celanese"). Symyx may receive up to
$20,000,000 of research funding under the terms of this agreement. The
collaboration is focused on heterogeneous catalysis for commodity chemical
applications, a program that began as part of a February 1997 broad research
collaboration with Hoechst AG. The program was transferred from Hoechst to its
chemical and acetate products subsidiary, Celanese, in keeping with Hoechst's
decision to focus exclusively on life sciences. The Company will also receive
royalties on the sale of products commercialized under this agreement. During
the year ended December 31, 1998 and the six months ended June 30, 1999, the
Company recognized net revenue of $4,783,000 and $1,812,000, respectively, in
connection with the Celanese/Hoechst collaboration. The Company previously had a
collaboration with Hoechst pursuant to which approximately $3,667,000 of
research revenue was earned in 1997. Separately, Hoechst's subsidiary, Aventis
Research and Technologies, has made an equity investment of $1,800,000 in the
Company. Included in this amount is 51,993 shares of Series D convertible
preferred stock valued at $300,000 that was granted in consideration for the
transfer of certain rights to technology, the value of which was included in
research and development expense.
During 1998, the Company was awarded grants from the U.S. Office of Naval
Research Defense Advanced Research Projects Agency (DARPA) and the U.S.
Department of Energy. During the six months ended June 30, 1999, the Company was
awarded one additional grant from both the U.S. Office of Naval Research Defense
Advanced Research Projects Agency (DARPA) and the U.S. Department of Energy.
Under these collaboration arrangements, the Company will be reimbursed for
research costs over various periods as specified in the agreements. During the
six months ended June 30, 1999 and the years ended December 31, 1998 and 1997,
revenue recognized in the aggregate under these collaborations was approximately
$1,205,000, $1,011,000 and $60,000, respectively.
In January 1999, the Company entered into a three-year collaboration
agreement with the Dow Chemical Company to develop polyolefin catalysts
primarily directed toward the identification of new catalyst systems for the
production of a wide range of plastic products. Under the terms of the
agreement, the Company will receive $18,000,000 in guaranteed research payments
and fees, as well as royalties from polyolefin products sales
F-13
<PAGE> 74
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
resulting from the collaboration. During the six months ended June 30, 1999, the
Company has recognized $2,750,000 in connection with this collaboration.
In December 1997, the Company entered into a six-month interim research
funding agreement with The B.F. Goodrich Company to research polymers. The
Company received $1,005,000 of research funding under the terms of this
agreement. In August 1998, the interim agreement was expanded to a two-year
collaborative research agreement. Under the terms of the expanded agreement, the
Company would receive $3,810,000 of research funding. The Company would also
receive royalties on the sale of products commercialized under this agreement.
The collaboration agreement was terminated by mutual agreement in April 1999. In
consideration of the early termination of the agreement, the Company will
receive $1,273,000 in three payments through December 1999. During the year
ended December 31, 1998 and the six months ended June 30, 1999, the Company
recognized $1,722,000 and $977,000, respectively, in connection with the
interim, collaboration and termination agreements.
During 1998 and the first six months of 1999, the Company entered into
multiyear research agreements with several additional corporations. Under these
collaboration agreements, the Company will receive research funding over various
periods and would be entitled to milestone payments or royalties for any
products developed out of the collaboration. Revenue recognized in aggregate
under these collaborations was approximately $1,028,000 and $3,197,000 during
the year ended December 31, 1998 and the six months ended June 30, 1999,
respectively.
3. FACILITY LEASE AND OTHER COMMITMENTS
The Company entered into an 11 year operating lease agreement for its
facility commencing February 1, 1997, with rent payments commencing July 1,
1998. In May 1999, the Company entered into an eight-and-a-half-year operating
lease agreement for an additional facility commencing October 1999.
Rent expense, which is being recognized on a straight-line basis over the
lease term, was approximately $142,000, $348,000, and $308,000 for the years
ended December 31, 1996, 1997, and 1998, respectively, and $161,000 and $155,000
for the six months ended June 30, 1998 and 1999, respectively. Future
commitments under the operating lease for the facility are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ ----------
<S> <C> <C>
1999........................................... $ 255,793 $ 411,313
2000........................................... 274,270 683,984
2001........................................... 293,546 717,761
2002........................................... 313,182 751,904
2003........................................... 332,859 786,084
Thereafter..................................... 1,562,634 3,692,934
---------- ----------
$3,032,284 $7,043,980
========== ==========
</TABLE>
F-14
<PAGE> 75
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
In connection with the build out of the Company's facility, the Company
entered into a loan and security agreement in January 1997 for up to $6,000,000
(of which $5,000,000 may be used for leasehold improvements). Amounts drawn
under the loan bear a weighted-average interest rate of 13.9%, have a term of 48
months and are secured by the building improvements financed. The Company issued
155,555 shares of common stock to the lender at $0.19 per share in January 1997
in connection with this arrangement. As of December 31, 1998, the Company has
drawn the full amount available under the arrangement.
In December 1998, the Company entered into loan and security arrangements
for up to $10,000,000 with Transamerica Business Credit and LMSI Venture
Finance. Amounts drawn under the loans will bear interest rates of approximately
8.5% to 10.0%, have a term of 48 months, and are secured by equipment financed
by proceeds under the agreements. Under these agreements, $5,624,000 was drawn
in 1998. An additional $2,026,000 was drawn under the agreement during the six
months ended June 30, 1999.
Future principal payments under the loan agreements are as follows as of
December 31, 1998:
<TABLE>
<S> <C>
1999...................................................... $ 2,435,836
2000...................................................... 2,733,567
2001...................................................... 3,088,487
2002...................................................... 1,769,738
-----------
Total principal payments.................................. $10,027,628
===========
</TABLE>
The carrying value of these loans approximates their fair value based on a
comparison to debt arrangements with similar terms and conditions.
4. STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
Concurrent with the Series D convertible preferred stock financing in 1998,
the Company's Articles of Incorporation were amended. The Company is authorized
to issue two classes of capital stock, designated, respectively, "common stock"
and "preferred stock" with total authorized shares of 50,000,000 and 23,650,000,
respectively (see note 6).
Each share of Series A, B, C, and D preferred stock is convertible into
shares of common stock on a 0.7778-for-one basis, subject to certain adjustments
for antidilution, if any, resulting from future stock issuances. The preferred
shares automatically convert into common stock immediately prior to the closing
of an underwritten public offering of common stock under the Securities Act of
1933 in which the Company receives at least $10,000,000 in aggregate gross
proceeds and the price per share is at least $6.00 (subject to adjustment for a
recapitalization or certain other stock adjustments).
Series A, B, C, and D preferred stockholders are entitled to annual
noncumulative dividends at an annual rate of $0.05, $0.15, $0.30, and $0.50 per
share, respectively, before and in preference to any dividends paid on common
stock, when, as and if declared by the
F-15
<PAGE> 76
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
board of directors. No dividends have been declared or paid as of December 31,
1998 or June 30, 1999.
The Series A, B, C, and D preferred stockholders are entitled to receive,
upon liquidation, a distribution of $0.50, $1.50, $3.00, and $4.50 per share,
respectively (subject to adjustment for a recapitalization) plus all declared
but unpaid dividends. Thereafter, the remaining assets and funds, if any, shall
be distributed to the common stockholders.
If, upon liquidation, the assets and funds distributed among the preferred
stockholders are insufficient to permit the entitled payment, the entire assets
and funds of the Company legally available for distribution shall be distributed
ratably among the holders of Series A, B, C, and D preferred shares in
proportion to the aggregate preferential amounts owed to each such holder.
The preferred stockholders have voting rights equal to the common shares
they would own upon conversion.
COMMON STOCK
Included in the common shares outstanding at December 31, 1997 and 1998 and
June 30, 1999 are 736,048, 1,141,539 and 1,565,733 shares subject to repurchase
rights, which generally expire ratably over five years from date of issuance.
Certain of these shares were issued pursuant to full-recourse notes receivable
which bear interest at rates between 4.6% and 6.0% per annum and are due and
payable on the earlier of 120 days after termination of the participant's
employment with the Company, or on various dates beginning in February 2003.
As of December 31, 1998, the Company has reserved shares of common stock
for future issuance as follows:
<TABLE>
<S> <C>
Stock option plans................................. 2,936,280
Preferred stock.................................... 15,991,849
----------
18,928,129
==========
</TABLE>
CLASS B COMMON STOCK
Each share of Class B common stock was convertible at the option of the
holder into shares of common stock. The conversion ratio was subject to
adjustment in certain circumstances including antidilution provisions, to a
maximum of 1 for 10. In December 1998, all class B common stock was converted
into common stock at a conversion ratio of 1 for 10.
STOCK OPTION PLANS
The Company's 1996 Stock Option Plan was adopted in March 1996 and provides
for the issuance of options for up to 1,153,444 shares of common stock to
employees and consultants.
F-16
<PAGE> 77
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
During 1997, the Company's board of directors approved the adoption of the
1997 Stock Option Plan with terms and conditions the same as those of the 1996
Stock Option Plan (collectively, the "Plans"). The 1997 Stock Option Plan
provides for the issuance of options for up to 5,055,556 shares of common stock
to employee and consultants.
Stock options granted under the Plans may be either incentive stock options
or nonstatutory stock options. Incentive stock options may be granted to
employees with exercise prices of no less than the fair value and nonstatutory
options may be granted to employees or consultants at exercise prices of no less
than 85% of the fair value of the common stock on the grant date, as determined
by the board of directors. The options expire no more than 10 years after the
date of grant or earlier if employment or relationship as a director or
consultant is terminated. If, at the time the Company grants an option, the
optionee owns stock representing more than 10% of the total combined voting
power of all classes of stock of the Company, the option price shall be at least
110% of the fair value on the date of grant and shall not be exercisable more
than five years after the date of grant. The board of directors shall determine
the times during the term when the options may be exercised and the number of
shares for which an option may be granted. Options may be granted with different
vesting terms from time to time but will provide for annual vesting of at least
20% of the total number of shares subject to the option. The Company allows
early exercise of options, subject to repurchase rights until such options are
fully vested.
F-17
<PAGE> 78
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
A summary of activity under the 1996 and 1997 Stock Option Plans is as
follows:
<TABLE>
<CAPTION>
OUTSTANDING STOCK OPTIONS
--------------------------------------------
WEIGHTED-
AVERAGE
NUMBER OF EXERCISE EXERCISE
SHARES PRICE PRICE
---------- ------------- ---------
<S> <C> <C> <C>
Options granted...................... 1,130,733 $0.01 - $0.19 $0.19
Options exercised.................... (238,515) $0.19 $0.19
----------
Balance at December 31, 1996......... 892,218 $0.01 - $0.19 $0.19
Options granted...................... 1,611,997 $0.19 - $0.39 $0.32
Options exercised.................... (315,643) $0.01 - $0.39 $0.23
Options canceled..................... (46,988) $0.19 $0.19
----------
Balance at December 31, 1997......... 2,141,584 $0.01 - $0.39 $0.28
Options granted...................... 1,205,430 $0.39 - $0.96 $0.71
Options exercised.................... (1,162,909) $0.19 - $0.96 $0.28
Options canceled..................... (229,885) $0.19 - $0.58 $0.26
----------
Balance at December 31, 1998......... 1,954,220 $0.19 - $0.96 $0.54
Options granted...................... 804,815 $0.96 - $3.86 $1.93
Options exercised.................... (871,738) $0.19 - $1.93 $0.75
Options canceled..................... (218,351) $0.19 - $1.93 $0.61
----------
Balance at June 30, 1999............. 1,668,946 $0.19 - $3.86 $1.08
==========
</TABLE>
At December 31, 1996, 1997, 1998, and June 30, 1999, vested and outstanding
options for 60,660, 542,676, 282,412, and 300,944 shares were exercisable at a
weighted-average price of $0.19, $0.30, $0.35, and $0.67, respectively. The
weighted-average grant date fair value of options granted during the years ended
December 31, 1996, 1997, 1998 and the six months ended June 30, 1999 was $0.10,
$0.16, $0.35, and $0.96, respectively. At December 31, 1998, options for shares
of common stock available for future grants under the 1996 and 1997 Stock Option
Plans are 121,222 and 860,838, respectively. At June 30, 1999, options for
shares of common stock available for future grants under the 1996 and 1997 stock
option plans are 121,222 and 1,830,027, respectively.
F-18
<PAGE> 79
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
An analysis of options outstanding at December 31, 1998 is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- -------------------------------
OPTIONS AVERAGE OPTIONS
OUTSTANDING AT REMAINING WEIGHTED- EXERCISABLE AT WEIGHTED-
EXERCISE DECEMBER 31, CONTRACTUAL AVERAGE DECEMBER 31, AVERAGE
PRICE 1998 LIFE EXERCISE PRICE 1998 EXERCISE PRICE
- ------------- -------------- ----------- -------------- -------------- --------------
(IN YEARS)
<S> <C> <C> <C> <C> <C>
$0.19 436,291 7.92 $0.19 127,590 $0.19
$0.39 854,736 8.98 $0.39 132,871 $0.39
$0.58 15,554 9.35 $0.58 -- $0.58
$0.96 647,639 9.66 $0.96 21,951 $0.96
--------- -------
$0.19 - $0.96 1,954,220 8.97 $0.54 282,412 $0.35
========= =======
</TABLE>
An analysis of options outstanding at June 30, 1999 is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- -------------------------------
OPTIONS AVERAGE OPTIONS
OUTSTANDING AT REMAINING WEIGHTED- EXERCISABLE AT WEIGHTED-
EXERCISE JUNE 30, CONTRACTUAL AVERAGE JUNE 30, AVERAGE
PRICE 1999 LIFE EXERCISE PRICE 1999 EXERCISE PRICE
- ------------- -------------- ----------- -------------- -------------- --------------
(IN YEARS)
<S> <C> <C> <C> <C> <C>
$0.19 247,552 7.28 $0.19 109,702 $0.19
$0.39 - $0.58 429,527 8.45 $0.40 86,930 $0.40
$0.96 597,702 9.31 $0.96 67,335 $0.96
$1.93 - $3.86 394,165 9.70 $2.61 36,977 $2.19
--------- -------
$0.19 - $3.86 1,668,946 8.87 $1.08 300,944 $0.67
========= =======
</TABLE>
Pro forma net loss information is required by SFAS 123, computed as if the
Company had accounted for its employee stock options granted under the fair
value method of that Statement. The fair value for these options was estimated
at the date of grant using the minimum value method with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Expected dividend yield................... 0% 0% 0%
Risk-free interest rate................... 6.29% 6.11% 5.25%
Expected life............................. 5 years 5 years 5 years
</TABLE>
F-19
<PAGE> 80
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
Had the Company valued its stock options according to the fair value
provisions of SFAS 123, pro forma net income (loss) and pro forma net income
(loss) per share would have been as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Net income (loss):
As reported............................ $(2,681) $(5,596) $(8,085)
======= ======= =======
Pro forma for SFAS 123................. $(2,688) $(5,640) $(8,156)
======= ======= =======
Basic and diluted net income (loss) per
share:
As reported............................ $ (1.24) $ (1.97) $ (2.11)
======= ======= =======
Pro forma for SFAS 123................. $ (1.24) $ (1.98) $ (2.13)
======= ======= =======
</TABLE>
During the year ended December 31, 1998 and during the six months ended
June 30, 1999, in connection with the grant of certain share options to
employees, the Company recorded deferred stock compensation of $405,000 and
$2,577,000, respectively, representing the difference between the exercise price
and the deemed fair value of the Company's common stock on the date such stock
options were granted. During the periods ended December 31, 1998 and June 30,
1999, the Company also recorded deferred compensation with respect to stock
options granted to consultants totaling $155,000 and $548,000, respectively.
Options granted to consultants are periodically valued as they vest in
accordance with SFAS 123 and EITF 96-18 using a Black-Scholes model and the
following weighted-average assumptions for 1998 and 1999: estimated volatility
of 0.5, risk-free interest rate of 5.0%, no dividend yield; and an expected life
of the option equal to the full term, generally ten years from the date of
grant. Deferred compensation is included as a reduction of stockholders' equity
and is being amortized to expense on a graded vesting method. During the year
ended December 31, 1998 and during the six months ended June 30, 1999, the
Company recorded amortization of deferred stock compensation expense of
approximately $117,000 and $1,688,000, respectively. At June 30, 1999, the
Company had a total of approximately $3.5 million remaining to be amortized over
the corresponding vesting period of each respective option, generally five
years.
5. INCOME TAXES
Due to the operating losses and the inability to recognize the benefits
therefrom, there is no provision for income taxes for the years ended December
31, 1996, 1997, and 1998.
As of December 31, 1998, the Company had a federal net operating loss
carryforward of approximately $16,200,000. The Company also had federal research
and development credit carryforwards of approximately $500,000. The net
operating loss and credit carryforwards will expire at various dates beginning
in 2010 through 2018, if not utilized.
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the "change in the ownership" provisions of
the Internal Revenue
F-20
<PAGE> 81
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
Code of 1986 and similar state provisions. The annual limitation may result in
the expiration of net operating losses and credit before utilization.
Deferred tax assets and liabilities reflected the net tax effects of net
operating loss and credit carryforwards and of temporary differences between the
carrying amounts of assets and liabilities for financial reporting and the
amounts used for income tax purposes. Significant components of the Company's
deferred tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 2,800 $ 5,800
Tax credit carryforwards........................... 300 800
Capitalized research & development................. 200 300
Other.............................................. 100 500
------- -------
Total deferred tax assets.......................... 3,400 7,400
Valuation allowance for deferred tax assets........ (3,400) (7,400)
------- -------
Net deferred tax assets............................ $ -- $ --
======= =======
</TABLE>
SFAS No. 109 provides for the recognition of deferred tax assets if
realization of such assets is more likely than not. Based upon the weight of
available evidence, which includes the Company's historical operating
performance and the reported cumulative net losses in all prior year, the
Company has provided a full valuation allowance against its net deferred tax
assets.
The net valuation allowance increased by $1,000,000 and $1,200,000 during
the years ended December 31, 1996 and 1997, respectively.
6. SUBSEQUENT EVENTS
In August 1999, the board of directors authorized management of the Company
to file a registration statement with the Securities and Exchange Commission
permitting the Company to sell shares of its common stock to the public. If the
initial public offering is closed under the terms presently anticipated, all of
the preferred stock outstanding will automatically convert into 15,991,849
shares of common stock. Unaudited pro forma stockholders' equity, as adjusted
for the assumed conversion of the preferred stock, is set forth on the balance
sheet.
In September 1999, the board of directors and stockholders approved a
nine-for-seven reverse split of the Company's common stock. All share and per
share amounts in the accompanying financial statements have been adjusted
retroactively.
In September 1999, the board of directors approved an amendment to the
Company's articles of incorporation to authorize 10,000,000 shares of
undesignated preferred stock, for which the board of directors is authorized to
fix the designation, powers, preferences and
F-21
<PAGE> 82
SYMYX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED)
rights and an increase in the authorized number of shares of common stock to
100,000,000 shares.
In September 1999, the Company's board of directors adopted the 1999
Employee Stock Purchase Plan (the "Purchase Plan"). A total of 300,000 shares of
the Company's common stock have been reserved for issuance under the Purchase
Plan. The Purchase Plan permits eligible employees to purchase common stock at a
discount, but only through payroll deductions, during concurrent 24-month
offering periods. Each offering period will be divided into four consecutive
six-month purchase periods. The price at which stock is purchased under the
Purchase Plan is equal to 85% of the fair market value of the common stock on
the first or last day of the offering period, whichever is lower. The initial
offering period will commence on the effective date of the offering contemplated
by this Prospectus. In addition, the Purchase Plan provides for annual increases
in the number of shares available for issuance under the Purchase Plan on the
first day of each fiscal year, beginning with fiscal 2000, equal to the lessor
of 1% of the outstanding shares of common stock on the first day of the fiscal
year, 350,000 shares, or a lesser amount as determined by the board of
directors.
In September 1999, the Company's board of directors approved the annual
increase, beginning in fiscal year 2000, in the number of shares of common stock
reserved for issuance under the 1997 Stock Plan equal to the lesser of 1,500,000
shares, 4% of the outstanding shares on the date of the annual increase, or a
lesser amount as determined by the board of directors.
F-22
<PAGE> 83
Inside Front Cover
Depiction of the various stages of the Symyx Complete Discovery Platform. The
various stages are: Target New Material; Synthesis; Screening; Informatics; New
Materials Discovery.
Gate Fold
Depiction of four markets targeted by Symyx. Depiction of differences between
Symyx High Speed Discovery methods and traditional methods for materials
discovery. Depiction of Symyx strategies.
Page 32
Depiction of the various stages of the Symyx Complete Discovery Platform. The
various stages are: Target New Material; Synthesis; Screening; Informatics; New
Materials Discovery.
<PAGE> 84
SYMYX LOGO
SYMYX STRATEGIC ALLIANCES
We have alliances with these leading industrial companies, largely in the
chemicals and electronic sectors:
<TABLE>
<C> <S>
AGFA LOGO Agfa-Gevaert N.V. is a world leading imaging company.
BAYER LOGO Bayer AG is an international, research based company with
major businesses in life sciences, chemicals and polymer
technologies.
BASF LOGO The BASF Group is one of the leading companies in the
chemical industry with products ranging from basic chemicals
through innovative specialties and polymers to crop
protection and pharmaceuticals.
CELANESE LOGO Celanese Chemicals is one of the leading global
manufacturers of organic based chemicals for industrial
processing.
CIBA LOGO Ciba Specialty Chemicals is a global leader in the
discovery, development and manufacture of innovative
materials that provide color, performance and care for
plastics, coatings, and other products.
DOW CHEMICAL LOGO The Dow Chemical Company is a global science and technology
based company that develops and manufactures a portfolio of
chemical, plastic and agricultural products and services for
customers in 168 countries around the world.
OSRAM LOGO Osram Opto Semiconductors is a joint venture of the Siemens
subsidiary Osram GmbH and Infineon Technologies, the former
Semiconductor Group of Siemans AG. Osram is one of the
largest companies in the world for optoelectronic
semiconductors.
UNILEVER LOGO Unilever sells over 1,000 consumer product brands in 88
countries world-wide.
</TABLE>
<PAGE> 85
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses payable by Symyx in
connection with the registration of the common stock hereunder. All of the
amounts shown are estimates except for the SEC registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC Registration Fee....................................... $ 19,182
NASD Filing Fee............................................ 7,400
Nasdaq National Market Listing Fee......................... 95,000
Printing and Engraving Expenses............................ 200,000
Legal Fees and Expenses.................................... 300,000
Accounting Fees and Expenses............................... 250,000
Transfer Agent and Registrar Fees and Expenses............. 25,000
Blue Sky fees and expenses................................. 10,000
Miscellaneous Expenses..................................... 93,418
----------
Total............................................ $1,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our certificate of incorporation and our bylaws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. We have also entered into agreements with our directors and executive
officers that require Symyx, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors and executive officers to the fullest extent permitted by Delaware
law. We have also purchased directors and officers liability insurance, which
provides coverage against certain liabilities including liabilities under the
Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Within the last three years, and through June 30, 1999, we have issued
and sold the following unregistered securities:
(1) Since our inception, we have issued and sold an aggregate of
4,508,392 shares of common stock to the founding officers and directors of
Symyx and to certain other individuals at purchase prices ranging from
$0.001 to $0.96 per share.
(2) Since our inception, we have granted options to purchase 4,752,975
shares of common stock to employees, directors and consultants under our
1996 and 1997 stock plans at exercise prices ranging from $0.01 to $3.86
per share. Of the 4,752,975 shares granted, 1,668,946 remain outstanding,
2,588,805 shares of common stock have been
II-1
<PAGE> 86
purchased pursuant to exercises of stock options and 495,224 shares have
been canceled and returned to the 1996 and 1997 stock plans.
(3) In February 1996, we sold 1,000,000 shares of Series A preferred
stock at a price of $0.50 per share to one investor.
(4) In May 1996, we sold an aggregate of 8,600,687 shares of Series B
preferred stock at a price of $1.50 per share to approximately 101
investors.
(5) In July 1997, we sold an aggregate of 6,750,284 shares of Series C
preferred stock at a price of $3.00 per share to approximately 108
investors.
(6) In March, April, October and November 1998, we sold an aggregate
of 4,210,185 shares of Series D preferred stock at a price of $4.50 per
share to approximately 74 investors.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving any public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each transaction represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in such transactions. All
recipients had adequate access, through their relationship with Symyx, to
information about us.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1(a) Amended and Restated Certificate of Incorporation, as
currently in effect
3.1(b) Certificate of Incorporation to be filed upon completion of
the offering
3.2(a) Bylaws of Symyx as currently in effect
3.2(b) Bylaws of Symyx as in effect upon completion of the offering
*4.1 Specimen Common Stock Certificate
*5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Restated Investors Rights Agreement dated March 27, 1998
10.2 1996 Stock Plan and forms of agreements thereunder
10.3 1997 Stock Plan and forms of agreements thereunder
10.4 1999 Employee Stock Purchase Plan
10.5 Form of Director and Executive Officer Indemnification
Agreement
10.6 Form of Change of Control Agreement between Symyx and the
following individuals: Steven D. Goldby, Isy Goldwasser,
Jeryl L. Hilleman, and W. Henry Weinberg
</TABLE>
II-2
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.7 Standard Industrial/Commercial Single-Tenant Lease dated
November 15, 1996 between Symyx and Patrick and Bette Ng,
Co-Trustees for The Ng Living Trust, for office space
located at 3100 Central Expressway, Santa Clara, California,
and addenda and inserts thereto
10.7(a) First Amendment to Lease between Symyx and Patrick and Bette
Ng, Co-Trustees for The Ng Living Trust
+10.8 Collaboration Agreement dated March 1, 1998 between Symyx
and Bayer AG
+10.8(a) Amendment No. 1 dated May 1, 1998 to Collaboration Agreement
between Symyx and Bayer AG
+10.8(b) Amendment No. 2 dated November 1, 1998 to Collaboration
Agreement between Symyx and Bayer AG
+10.8(c) Amendment No. 3 dated January 1, 1999 to Collaboration
Agreement between Symyx and Bayer AG
+10.8(d) Amendment No. 4 dated September 15, 1999 to Collaboration
Agreement between Symyx and Bayer AG
+10.9 Celanese-Symyx Collaboration Agreement dated August 1, 1998
between Symyx and Celanese Ltd.
+10.10 Collaborative Research and License Agreement dated January
1, 1999 between Symyx and The Dow Chemical Company
23.1 Consent of Ernst & Young LLP, Independent Auditors
*23.2 Consent of Counsel (included in exhibit 5.1)
24.1 Power of Attorney (See page II-5)
27.1 Financial Data Schedule
</TABLE>
- -------------------------
* To be filed by amendment
+ Confidential treatment has been requested for portions of this exhibit
(b) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS
Insofar as indemnification by Symyx for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Symyx, we have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Symyx of expenses incurred or paid by a director, officer or controlling person
of Symyx in the successful defense of any action, suit or proceeding) is
asserted by a director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by Symyx is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 88
We hereby undertake that:
(a) We will provide to the underwriters at the closing as specified in
the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
(b) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by Symyx pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(c) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Symyx Technologies, Inc. has duly caused this Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Santa Clara, State of California, on the 21st day of September, 1999.
SYMYX TECHNOLOGIES, INC.
By: /s/ STEVEN D. GOLDBY
-----------------------------------
Steven D. Goldby
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven D. Goldby and Jeryl L. Hilleman
and each of them, his attorneys-in-fact, each with the power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same Offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto in all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every Act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ STEVEN D. GOLDBY Chief Executive Officer September 21, 1999
- ------------------------------------ and Chairman of the Board
Steven D. Goldby (Principal Executive
Officer)
/s/ JERYL L. HILLEMAN Senior Vice President and September 21, 1999
- ------------------------------------ Chief Financial Officer
Jeryl L. Hilleman (Principal Financial and
Accounting Officer)
/s/ THOMAS R. BARUCH Director September 21, 1999
- ------------------------------------
Thomas R. Baruch
</TABLE>
II-5
<PAGE> 90
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ SAMUEL D. COLELLA Director September 21, 1999
- ------------------------------------
Samuel D. Colella
/s/ MARTIN GERSTEL Director September 21, 1999
- ------------------------------------
Martin Gerstel
/s/ BARON GAULTHAUS KRAIJENHOFF Director September 21, 1999
- ------------------------------------
Baron Gaulthaus Kraijenhoff
/s/ FRANCOIS A. L'EPLATTENIER Director September 21, 1999
- ------------------------------------
Francois A. L'Eplattenier
/s/ KENNETH J. NUSSBACHER Director September 21, 1999
- ------------------------------------
Kenneth J. Nussbacher
/s/ MARIO M. ROSATI Director September 21, 1999
- ------------------------------------
Mario M. Rosati
/s/ PETER G. SCHULTZ Director September 21, 1999
- ------------------------------------
Peter G. Schultz
Director
- ------------------------------------
Isaac Stein
</TABLE>
II-6
<PAGE> 91
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1(a) Amended and Restated Certificate of Incorporation, as
currently in effect
3.1(b) Certificate of Incorporation to be filed upon completion of
the offering
3.2(a) Bylaws of Symyx as currently in effect
3.2(b) Bylaws of Symyx as in effect upon completion of the offering
*4.1 Specimen Common Stock Certificate
*5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Restated Investors Rights Agreement dated March 27, 1998
10.2 1996 Stock Plan and forms of agreements thereunder
10.3 1997 Stock Plan and forms of agreements thereunder
10.4 1999 Employee Stock Purchase Plan
10.5 Form of Director and Executive Officer Indemnification
Agreement
10.6 Form of Change of Control Agreement between Symyx and the
following individuals: Steven D. Goldby, Isy Goldwasser,
Jeryl L. Hilleman, and W. Henry Weinberg
10.7 Standard Industrial/Commercial Single-Tenant Lease dated
November 15, 1996 between Symyx and Patrick and Bette Ng,
Co-Trustees for The Ng Living Trust, for office space
located at 3100 Central Expressway, Santa Clara, California,
and addenda and inserts thereto
10.7(a) First Amendment to Lease between Symyx and Patrick and Bette
Ng, Co-Trustees for The Ng Living Trust
+10.8 Collaboration Agreement dated March 1, 1998 between Symyx
and Bayer AG
+10.8(a) Amendment No. 1 dated May 1, 1998 to Collaboration Agreement
between Symyx and Bayer AG
+10.8(b) Amendment No. 2 dated November 1, 1998 to Collaboration
Agreement between Symyx and Bayer AG
+10.8(c) Amendment No. 3 dated January 1, 1999 to Collaboration
Agreement between Symyx and Bayer AG
+10.8(d) Amendment No. 4 dated September 15, 1999 to Collaboration
Agreement between Symyx and Bayer AG
+10.9 Celanese-Symyx Collaboration Agreement dated August 1, 1998
between Symyx and Celanese Ltd.
+10.10 Collaborative Research and License Agreement dated January
1, 1999 between Symyx and The Dow Chemical Company
23.1 Consent of Ernst & Young LLP, Independent Auditors
*23.2 Consent of Counsel (included in exhibit 5.1)
24.1 Power of Attorney (See page II-5)
27.1 Financial Data Schedule
</TABLE>
- -------------------------
* To be filed by amendment
+ Confidential treatment has been requested for portions of this exhibit
<PAGE> 1
EXHIBIT 1.1
_____________ SHARES
SYMYX TECHNOLOGIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____________, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
INVEMED ASSOCIATES LLC
SCHRODER & CO. INC.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. Introductory. Symyx Technologies, Inc., a Delaware corporation
("COMPANY"), proposes to issue and sell ___________ shares ("FIRM SECURITIES")
of its Common Stock, par value $0.001, per share, ("Securities") and also
proposes to issue and sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than _________ additional shares
("OPTIONAL SECURITIES") of its Securities as set forth below. The Firm
Securities and the Optional Securities are herein collectively called the
"OFFERED SECURITIES". The Company hereby agrees with the several Underwriters
named in Schedule A hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 333- ) relating to the
Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission ("COMMISSION") and either (i) has
been declared effective under the Securities Act of 1933 ("ACT") and is
not proposed to be amended or (ii) is proposed to be amended by
amendment or post-effective amendment. If such registration statement
("INITIAL REGISTRATION STATEMENT") has been declared effective, either
(i) an additional registration statement ("ADDITIONAL REGISTRATION
STATEMENT") relating to the Offered Securities may have been filed with
the Commission pursuant to Rule 462(b) ("RULE 462(b)") under the Act
and, if so filed, has become effective upon filing pursuant to such Rule
and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional
registration statement is proposed to be filed with the Commission
pursuant to Rule 462(b) and will become effective upon filing pursuant
to such Rule and upon such filing the Offered Securities will all have
been duly registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Company
does not propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company does
not propose to amend it, and if any post-effective amendment to either
such registration statement has been filed with the Commission prior to
the execution and delivery of this Agreement, the most recent amendment
(if any) to each such registration statement has been declared effective
by the Commission or has become effective upon filing pursuant to Rule
462(c) ("RULE 462(c)") under the Act or, in the case of the additional
registration statement,
<PAGE> 2
Rule 462(b). For purposes of this Agreement, "EFFECTIVE TIME" with
respect to the initial registration statement or, if filed prior to the
execution and delivery of this Agreement, the additional registration
statement means (i) if the Company has advised the Representatives that
it does not propose to amend such registration statement, the date and
time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c), or (ii) if
the Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended by
such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it
proposes to file one, "EFFECTIVE TIME" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "EFFECTIVE DATE" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration statement,
as amended at its Effective Time, including all information contained in
the additional registration statement (if any) and deemed to be a part
of the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act,
is hereinafter referred to as the "INITIAL REGISTRATION STATEMENT". The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if any)
deemed to be a part of the additional registration statement as of its
Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "ADDITIONAL REGISTRATION STATEMENT". The Initial Registration
Statement and the Additional Registration Statement are herein referred
to collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("RULE 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, is
hereinafter referred to as the "PROSPECTUS". No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (i)
on the Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of
the Act and the rules and regulations of the Commission ("RULES AND
REGULATIONS") and did not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to
the requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and (iii) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects
to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus will
conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement
of a material fact or will
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<PAGE> 3
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b) hereof.
(c) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such qualification;
and the Company has no subsidiaries.
(d) The Offered Securities and all other outstanding shares
of capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with
this Agreement on each Closing Date (as defined below), such Offered
Securities will have been, validly issued, fully paid and nonassessable
and will conform to the description thereof contained in the Prospectus;
and the stockholders of the Company have no preemptive rights with
respect to the Securities.
(e) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(f) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant
to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under
the Act which have not been validly satisfied or waived.
(g) The Offered Securities have been approved for listing on
Nasdaq Stock Market's National Market subject to notice of issuance.
(h) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this Agreement
in connection with the issuance and sale of the Offered Securities by
the Company, except such as have been obtained and made under the Act
and such as may be required under state securities laws.
(i) The execution, delivery and performance of this
Agreement, and the issuance and sale of the Offered Securities will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any of its properties,
or any agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the properties of the
Company are subject, or the charter or by-laws of the Company, and the
Company has full power and authority to authorize, issue and sell the
Offered Securities as contemplated by this Agreement.
(j) This Agreement has been duly authorized, executed and
delivered by the Company.
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<PAGE> 4
(k) Except as disclosed in the Prospectus, the Company has
good and marketable title to all real properties and all other
properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by it;
and except as disclosed in the Prospectus, the Company holds any leased
real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be
made thereof by the Company.
(l) The Company possess adequate certificates, authorities
or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it and has not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on the condition (financial or
other), business, properties or results of operations of the Company
("MATERIAL ADVERSE EFFECT").
(m) The Company is not in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company is a party
or by which it may be bound, or to which any of the property or assets
of the Company is subject except for such defaults that would not be
reasonably expected to result in a Material Adverse Effect.
(n) No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent that might have
a Material Adverse Effect.
(o) The Company owns or possesses adequate licenses or other
rights to use all patents, copyrights, trademarks, service marks, trade
names, technology and know-how necessary (in any material respect) to
conduct its business in the manner described in the Prospectus, the
Company is not obligated to pay a royalty, grant a license, or provide
other consideration to any third party in connection with its patents,
copyrights, trademarks, service marks, trade names, or technology other
than as disclosed in the Prospectus, and, except as disclosed in the
Prospectus, the Company has not received any notice of infringement or
conflict with (and the Company knows of any infringement or conflict
with) asserted rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names, technology or know-how which
could result in any material adverse effect upon the Company and, except
as disclosed in the Prospectus, the discoveries, inventions, products or
processes of the Company referred to in the Prospectus do not, to the
best knowledge of the Company, infringe or conflict with any right or
patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third
party, known to the Company which could have a material adverse effect
on the Company. No third party, including any academic or governmental
organization, possesses rights to the Company's patents, copyrights,
trademarks, service marks, trade names, or technology which, if
exercised, could enable such third party to develop products competitive
to those of the Company or could have a material adverse effect on the
ability of the Company to conduct its business in the manner described
in the Prospectus.
(p) Except as disclosed in the Prospectus, the Company (i)
is not in violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances
(collectively, "ENVIRONMENTAL LAWS"), (ii) does not own or operate any
real property contaminated with any substance that is subject to any
environmental laws and (iii) is not liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the aggregate
have a Material Adverse Effect; and the Company is not aware of any
pending investigation which might lead to such a claim.
-4-
<PAGE> 5
(q) The Company is not in violation of any federal or state
law or regulation relating to occupational safety and health and the
Company has received all permits, licenses or other approvals required
of it under applicable federal and state occupational safety and health
laws and regulations to conduct its businesses, and the Company is in
compliance with all terms and conditions of any such permit, licenses or
other approval, except any such violation of law or regulation, failure
to receive required permits, licenses or approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
which would not, singly or in the aggregate, have a Material Adverse
Effect on or constitute a materially adverse change in, or constitute a
development involving a prospective Material Adverse Effect on or change
in, the condition (financial or otherwise), earnings, properties,
business affairs or business prospects, net worth or results of
operations of the Company, except as described in or contemplated by the
Prospectus.
(r) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company,
or any of its properties that, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse Effect,
or would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(s) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as described in or
contemplated by the Prospectus.
(t) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company as of the dates shown and their results of operations and
cash flows for the periods shown, and, except as otherwise disclosed in
the Prospectus, such financial statements have been prepared in
conformity with the generally accepted accounting principles in the
United States applied on a consistent basis and the schedules included
in each Registration Statement present fairly the information required
to be stated therein and the assumptions used in preparing the pro forma
financial statements included in each Registration Statement and the
Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts; and to the Company's knowledge, Ernst &
Young LLP, who certified the financial statements and supporting
schedules included in the Registration Statement, are independent public
accountants as required by the Act and the Act Regulations.
(u) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and
to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(v) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company except as disclosed in or
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<PAGE> 6
contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(w) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is
engaged; the Company has not been refused any insurance coverage sought
or applied for; and the Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or otherwise),
earnings, properties, business affairs or business prospects, net worth
or results of operations of the Company, except as described in or
contemplated by the Prospectus.
(x) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension Plan"
(as defined in ERISA) for which the Company would have liability; the
Company has not incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "pension Plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "pension
plan" for which the Company would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(y) The Company has reviewed its operations and is making
inquiries of the Year 2000 compliance of any third parties with which
the Company has a material relationship to evaluate the extent to which
the business or operations of the Company will be affected by the Year
2000 Problem. As a result of such review and except to the extent
otherwise disclosed in the Prospectus, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference
with the Company's business or operations. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in
the operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or times
periods occurring prior to January 1, 2000.
(z) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940.
3. Purchase, Sale and Delivery of Offered Securities. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $________ per share, the respective
numbers of shares of Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
(a) The Company will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of
the purchase price in Federal (same day) funds by official bank check or
checks or wire transfer to an account at a bank acceptable to Credit
Suisse First
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<PAGE> 7
Boston Corporation ("CSFBC") drawn to the order of the Company at the
office of Wilson Sonsini Goodrich & Rosati, Professional Corporation
("WSGR"), 650 Page Mill Road, Palo Alto, California 94304, at [6:30]
A.M., local time, on ________________, or at such other time not later
than seven full business days thereafter as CSFBC and the Company
determine, such time being herein referred to as the "FIRST CLOSING
DATE". For purposes of Rule 15c6-1 under the Securities Exchange Act of
1934, the First Closing Date (if later than the otherwise applicable
settlement date) shall be the settlement date for payment of funds and
delivery of securities for all the Offered Securities sold pursuant to
the offering. The certificates for the Firm Securities so to be
delivered will be in definitive form, in such denominations and
registered in such names as CSFBC requests and will be made available
for checking and packaging at the above office of WSGR at least 24 hours
prior to the First Closing Date.
(b) In addition, upon written notice from CSFBC given to the
Company from time to time not more than 30 days subsequent to the date
of the Prospectus, the Underwriters may purchase all or less than all of
the Optional Securities at the purchase price per Security to be paid
for the Firm Securities. The Company agrees to sell to the Underwriters
the number of shares of Optional Securities specified in such notice and
the Underwriters agree, severally and not jointly, to purchase such
Optional Securities. Such Optional Securities shall be purchased for the
account of each Underwriter in the same proportion as the number of
shares of Firm Securities set forth opposite such Underwriter's name
bears to the total number of shares of Firm Securities (subject to
adjustment by CSFBC to eliminate fractions) and may be purchased by the
Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have
been, or simultaneously are, sold and delivered. The right to purchase
the Optional Securities or any portion thereof may be exercised from
time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the
Company.
(c) Each time for the delivery of and payment for the
Optional Securities, being herein referred to as an "OPTIONAL CLOSING
DATE", which may be the First Closing Date (the First Closing Date and
each Optional Closing Date, if any, being sometimes referred to as a
"CLOSING DATE"), shall be determined by CSFBC but shall be not later
than five full business days after written notice of election to
purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against
payment of the purchase price therefor in Federal (same day) funds by
official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC drawn to the order of the Company, at the above
office of WSGR. The certificates for the Optional Securities being
purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made
available for checking and packaging at the above office of WSGR at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to
by CSFBC, subparagraph (4)) of Rule 424(b) not later than the earlier of
(A) the second business day following the execution and delivery of this
Agreement or (B) the fifteenth business day after the Effective Date of
the Initial Registration Statement. The Company will advise CSFBC
promptly of any such filing pursuant to Rule 424(b). If the Effective
Time of the Initial Registration
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<PAGE> 8
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a portion
of the Offered Securities under the Act but the Effective Time thereof
has not occurred as of such execution and delivery, the Company will
file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make
such filing at such later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal
to amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial Registration
Statement, the Additional Registration Statement (if any) or the
Prospectus and will not effect such amendment or supplementation without
CSFBC's consent; and the Company will also advise CSFBC promptly of the
effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of a Registration Statement or the
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Act,
the Company will promptly notify CSFBC of such event and will promptly
prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent to,
nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section
6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a period
of at least 12 months beginning after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"AVAILABILITY DATE" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of
the Company's fiscal year, "AVAILABILITY DATE" means the 90th day after
the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies
of each Registration Statement (five of which will be signed and will
include all exhibits), each related preliminary prospectus, and, so long
as a prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any Underwriter or
dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC requests. The
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial
Registration Statement. All other documents shall be so furnished as
soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates and will continue such qualifications in effect so long
as required for the distribution.
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<PAGE> 9
(g) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request, to each of the
other Underwriters, as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the
Company will furnish to the Representatives (i) as soon as available, a
copy of each report and any definitive proxy statement of the Company
filed with the Commission under the Securities Exchange Act of 1934 or
mailed to stockholders, and (ii) from time to time, such other
information concerning the Company as CSFBC may reasonably request.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing fees
and other expenses (including fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions as CSFBC designates and the
printing of memoranda relating thereto, for the filing fee incident to,
and the reasonable fees and disbursements of counsel to the Underwriters
in connection with, the review by the National Association of Securities
Dealers, Inc. (the "NASD") of the Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities and for expenses
incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
(i) For a period of 180 days after the date of the initial
public offering of the Offered Securities, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or
securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make any
such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except issuances of Securities pursuant to the
conversion or exchange of convertible or exchangeable securities or the
exercise of warrants or options, in each case outstanding on the date
hereof, or grants of employee stock options pursuant to the terms of a
plan in effect on the date hereof, issuances of Securities pursuant to
the exercise of such options.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions precedent:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery of
this Agreement, shall be on or prior to the date of this Agreement or,
if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective
Time), of Ernst & Young LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
the Registration Statements;
-9-
<PAGE> 10
(iii) the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that:
(A) the unaudited financial statements
included in the Registration Statements do not comply as
to form in all material respects with the applicable
accounting requirements of the Act and the related
published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally
accepted accounting principles;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three business
days prior to the date of such letter, there was any
change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company
or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in net
assets, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(C) for the period from the closing date of
the latest income statement included in the Prospectus
to the closing date of the latest available income
statement read by such accountants there were any
decreases, as compared with the corresponding period of
the previous year and with the period of corresponding
length ended the date of the latest income statement
included in the Prospectus, in net sales or net
operating income or in the total or per share amounts of
net income
except in all cases set forth in clauses B and C above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company the internal controls
of the Company's accounting system or are derived directly from
such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have
found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as
otherwise specified in such letter.
For purposes of this subsection 6(a), (i) if the Effective Time
of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, "REGISTRATION
STATEMENTS" shall mean the initial registration statement as
proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii)
if the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement but the
Effective Time of the Additional Registration is subsequent to
such execution and delivery, "REGISTRATION STATEMENTS" shall
mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to
be amended by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "PROSPECTUS" shall mean
the prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than
-10-
<PAGE> 11
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by CSFBC. If the Effective Time of
the Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Company or the Representatives, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities;
(ii) any material suspension or material limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (iii) any banking moratorium declared by U.S.
Federal or New York authorities; or (iv) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including the Representatives, the effect
of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion,
dated such Closing Date, of WSGR, counsel for the Company, to the effect
that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to do business as
a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification; and the
Company has no subsidiaries;
(ii) The Offered Securities delivered on such Closing
Date and all other outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description thereof
contained in the Prospectus; and the stockholders of the Company
have no preemptive rights with respect to the Securities;
(iii) Except as disclosed in the Prospectus and which
such rights have been waived, there are no contracts, agreements
or understandings known to such counsel between the Company and
any person granting such person the right to require the Company
to file a registration statement under the Act with respect to
any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
-11-
<PAGE> 12
(iv) The Company is not and, after giving effect to
the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(v) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated
by this Agreement in connection with the issuance or sale of the
Offered Securities by the Company, except such as have been
obtained and made under the Act and such as may be required
under state securities laws;
(vi) The execution, delivery and performance of this
Agreement and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company or any of its
properties, or any agreement or instrument to which the Company
is a party or by which the Company is bound or to which any of
the properties of the Company is subject, or the charter or
by-laws of the Company, and the Company has full power and
authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement;
(vii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the Additional Registration Statement (if any) was
filed and became effective under the Act as of the date and time
(if determinable) specified in such opinion, the Prospectus
either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the
date specified therein or was included in the Initial
Registration Statement or the Additional Registration Statement
(as the case may be), and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and
no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and each Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations;
(viii) The descriptions in the Registration Statements
and Prospectus of statutes, legal and governmental proceedings
and contracts and other documents are accurate and fairly
present the information required to be shown;
(ix) Such counsel do not know of any legal or
governmental proceedings required to be described in a
Registration Statement or the Prospectus which are not described
as required or of any contracts or documents of a character
required to be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a Registration
Statement which are not described and filed as required; it
being understood that such counsel need express no opinion as to
the financial statements or other financial data contained in
the Registration Statements or the Prospectus; and
(x) This Agreement has been duly authorized,
executed and delivered by the Company.
In addition, such counsel shall state that they have no reason
to believe that any part of a Registration Statement or any
amendment thereto, as of its effective date or as of such
Closing Date, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
-12-
<PAGE> 13
(e) The Representatives shall have received such opinion or
opinions with regard to patent matters dated on such Closing
Date that is or are in form and substance satisfactory to
counsel for the Representatives.
-13-
<PAGE> 14
(f) The Representatives shall have received from Pillsbury
Madison & Sutro LLP, counsel for the Underwriters, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of
the Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters. In rendering
such opinion, Pillsbury Madison & Sutro LLP may rely as to the
incorporation of the Company and all other matters governed by Delaware
law upon the opinion of WSGR referred to above.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable investigation,
shall state that: the representations and warranties of the Company in
this Agreement are true and correct; the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; no stop order
suspending the effectiveness of any Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; the Additional Registration Statement
(if any) satisfying the requirements of subparagraphs (1) and (3) of
Rule 462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the
Act, prior to the time the Prospectus was printed and distributed to any
Underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change,
nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Company except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(h) The Representatives shall have received a letter, dated
such Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
The Company will furnish the Representatives with such conformed copies
of such opinions, certificates, letters and documents as the Representatives
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use
-14-
<PAGE> 15
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(b) below.
(b) Each Underwriter will severally and not jointly
indemnify and hold harmless the Company, its directors and officers and
each person, if any who controls the Company within the meaning of
Section 15 of the Act, against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, it
being understood and agreed that the only such information furnished by
any Underwriter consists of the following information in the Prospectus
furnished on behalf of each Underwriter: the concession and reallowance
figures appearing in the _____ paragraph under the caption
"Underwriting" and the information regarding stabilizing, over-allotment
and penalty bids contained in the ____ paragraph under the caption
"Underwriting."
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a) or (b) above, notify
the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement
(i) includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and
(ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of an indemnified party.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
-15-
<PAGE> 16
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall
be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section shall be in addition
to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each director
of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the
Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date,
CSFBC may make arrangements satisfactory to the Company for the purchase of such
Offered Securities by other persons, including any of the Underwriters, but if
no such arrangements are made by such Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC and the Company for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company, except as provided in Section 9 (provided that if such default occurs
with respect to Optional Securities after the First Closing Date, this Agreement
will not terminate as to the Firm Securities or any Optional Securities
purchased prior to such termination). As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Underwriters is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Company and the Underwriters
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of
-16-
<PAGE> 17
any event specified in clause (iii), (iv) or (v) of Section 6(c), the Company
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department--Transactions Advisory Group with a copy to Pillsbury Madison & Sutro
LLP, 2550 Hanover Street, Palo Alto, CA 94304, Attention: John L. Donahue, or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at Symyx Technologies, Inc., 3100 Central Expressway, Santa Clara, CA
95051, Attention: Chief Executive Officer with a copy to Wilson Sonsini Goodrich
& Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, CA 94304,
Attention: Christopher D. Mitchell; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for
the several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives or CSFBC will be binding upon all
the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
-17-
<PAGE> 18
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
SYMYX TECHNOLOGIES, INC.
By _______________________________________
Its ___________________________________
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
INVEMED ASSOCIATES LLC
SCHROEDER & CO. INC.
Acting on behalf of themselves and as the Representatives of
the several Underwriters
By CREDIT SUISSE FIRST BOSTON
CORPORATION
By _______________________________________
Its ___________________________________
-18-
<PAGE> 19
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
<S> <C>
Credit Suisse First Boston Corporation......................... $
Donaldson, Lufkin & Jenrette Securities Corporation............
Invemed Associates LLC.........................................
Schroder & Co. Inc.............................................
---------------
Total.................................... [$]
===============
</TABLE>
-19-
<PAGE> 1
EXHIBIT 3.1(a)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYMYX TECHNOLOGIES, INC.
Symyx Technologies, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Symyx Technologies, Inc. The original
Certificate of Incorporation of the corporation was filed with the Secretary of
State of the State of Delaware on October 5, 1998.
B. Pursuant to Sections 241 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates, integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
C. The corporation has not received any payment for its stock, and no
directors have been named in the original Certificate of Incorporation or been
subsequently elected or appointed. The undersigned is the sole incorporator of
the corporation and has duly adopted this amendment in accordance with Section
241 of the General Corporation Law of the State of Delaware.
D. The text of the Certificate of Incorporation as heretofore amended
or supplemented is hereby amended and restated in its entirety to read as
follows:
ARTICLE I
The name of this corporation is Symyx Technologies, Inc.
ARTICLE II
The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such office is The
Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
<PAGE> 2
ARTICLE IV
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which this corporation is authorized to issue is 73,650,000 shares.
50,000,000 shares shall be Common Stock with a par value of $0.001 per share.
23,650,000 shares shall be Preferred Stock with a par value of $0.001 per share,
of which 1,000,000 shall be designated Series A Preferred Stock, 8,650,000 shall
be designated Series B Preferred Stock, 8,000,000 shall be designated Series C
Preferred Stock and 6,000,000 shall be designated Series D Preferred Stock.
ARTICLE V
The rights, preferences, privileges and restrictions granted to or
imposed on the Common Stock and the Preferred Stock or the holders thereof are
as follows:
1. Dividend Provisions. The holders of shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock shall be entitled to receive dividends, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any
dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of this corporation) on the Common
Stock of this corporation, at the rate of $0.05 per share of Series A Preferred
Stock per annum, $0.15 per share of the Series B Preferred Stock per annum,
$0.30 per share of Series C Preferred Stock and $0.50 per share of Series D
Preferred Stock or, if greater (as determined on a per annum basis and on an as
converted basis for the Preferred Stock), an amount equal to that paid on any
other outstanding shares of this corporation. Such dividends shall be payable
when, as and if declared by the Board of Directors, and shall not be cumulative,
and no right shall accrue to holders of Common Stock or Preferred Stock by
reason of the fact that dividends on said shares are not declared in any prior
period. No shares of Common Stock shall receive any dividend at a rate which is
greater than the rate at which dividends are simultaneously paid in respect of
the Preferred Stock (based on the number of shares of Common Stock into which
the Preferred Stock is convertible on the date of declaration of the dividend).
2. Liquidation Preference.
(a) Preferred Preference. In the event of any liquidation,
dissolution or winding up of this corporation, either voluntary or involuntary,
the holders of Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Common Stock by reason of their ownership thereof, amounts per share
equal to $0.50 for each outstanding share of Series A Preferred Stock then held,
$1.50 for each outstanding share of Series B Preferred Stock then held, $3.00
for each outstanding share of Series C Preferred Stock and $4.50 for each
outstanding share of Series D Preferred Stock then held (each as adjusted for
stock splits, combinations or similar events and such amount being referred to
herein as the Series A, Series B, Series C and Series D "Preferred Preference,"
respectively), plus any declared but unpaid dividends on such shares (such
amount being referred to herein as the "Premium"). If upon the occurrence of
such event,
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<PAGE> 3
the assets and funds thus distributed among the holders of the Preferred Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, the entire assets and funds of this
corporation legally available for distribution shall be distributed ratably
among the holders of the Preferred Stock, in equal priority on a pari passu
basis according to their respective Preferred Preferences.
(b) Remaining Assets. After distribution of the Preferred
Preferences to the holders of Preferred Stock, any remaining assets of the
corporation available for distribution to shareholders shall be distributed
ratably among the holders of Common Stock based on the number of shares held by
each such holder.
(c) Mergers. A merger, acquisition, reorganization, or sale of all
or substantially all of the assets of this corporation in which the shareholders
of this corporation immediately prior to the transaction possess less than 50%
of the voting power of the surviving entity (or its parent) immediately after
the transaction shall be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 2; provided that the holders of Preferred
Stock and Common Stock shall be paid in cash or in securities received or in a
combination thereof (which combination shall be in the same proportions as the
consideration received in the transaction). Any securities to be delivered to
the holders of the Preferred Stock and Common Stock upon merger, acquisition,
reorganization or sale of substantially all the assets of the corporation shall
be valued as follows:
(d) if traded on a securities exchange, the value shall be deemed to
be the average of the closing prices of the securities on such exchange over the
30-day period ending three (3) business days prior to the closing;
(e) if actively traded over-the-counter, the value shall be deemed
to be the average of the closing bid prices over the 30-day period ending three
(3) business days prior to the closing; and
(f) if there is no active public market, the value shall be the fair
market value thereof as mutually determined by the corporation and the holders
of not less than a majority of the outstanding shares of Preferred Stock,
provided that if the corporation and the holders of a majority of the
outstanding shares of Preferred Stock are unable to reach agreement, then by
independent appraisal by an investment banker hired and paid by the corporation,
but acceptable to the holders of a majority of the outstanding shares of
Preferred Stock.
3. Conversion. The holders of the Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible without the payment of any additional consideration by the holder
thereof and, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Preferred Stock. Each share of Preferred Stock shall be convertible into
the number of fully paid and nonassessable shares of Common Stock which results
from dividing the Conversion Price (as hereinafter defined) per share in effect
for such Preferred Stock at the time of conversion into the per share
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<PAGE> 4
Conversion Value (as hereinafter defined) of such series. The number of shares
of Common Stock into which a share of a series of Preferred Stock is convertible
is hereinafter referred to as the "Conversion Rate" of such series. The initial
Conversion Price per share of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall be $0.50,
$1.50, $3.00 and $4.50 per share, respectively. The per share Conversion Value
of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock shall be $0.50, $1.50, $3.00 and $4.50 per
share, respectively. The initial Conversion Price of Preferred Stock shall be
subject to adjustment from time to time as provided below.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at its then effective
Conversion Rate immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the Act
covering the offer and sale of Common Stock in which (a) the public offering
price equals or exceeds $6.00 per share (adjusted to reflect subsequent stock
dividends, stock splits or recapitalization) and (b) the aggregate proceeds
raised equals or exceeds $10,000,000.
(c) Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into shares of Common Stock, such holders
of Preferred Stock shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the corporation or of any transfer agent for the
Preferred Stock and shall give written notice to the corporation at such office
that such holders of Preferred Stock elect to convert the same (except that no
such written notice of election to convert shall be necessary in the event of an
automatic conversion pursuant to Section 3(b) hereof). The corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Preferred Stock a certificate or certificates for the number of shares of
Common Stock to which such holders of Preferred Stock shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted (except that in the case of an automatic
conversion pursuant to Section 3(b) hereof such conversion shall be deemed to
have been made immediately prior to the closing of the offering referred to in
Section 3(b)) and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
(d) Fractional Shares. In lieu of any fractional shares to which the
holder of Preferred Stock would otherwise be entitled, the corporation shall pay
cash equal to such fraction multiplied by the fair market value of one share of
such series of Preferred Stock as determined by the board of directors of the
corporation. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Preferred
Stock of each holder at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
(e) Adjustment of Conversion Price. The Conversion Price of
Preferred Stock shall be subject to adjustment from time to time as follows:
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<PAGE> 5
(i) If the corporation shall issue any Common Stock other than
"Excluded Stock", as defined below, for a consideration per share less than the
Conversion Price in effect with respect to a Series of Preferred Stock
immediately prior to the issuance of such Common Stock (excluding stock
dividends, subdivisions, split-ups, combinations, dividends or recapitalizations
which are covered by Section 3(e)(iii), (iv), (v) and (vi)), the Conversion
Price in effect with respect to such Series of Preferred Stock immediately after
each such issuance shall forthwith (except as provided in this Section 3(e)) be
adjusted to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of
(x) the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon conversion of the Preferred
Stock, or deemed to have been issued pursuant to subdivision (3) of this clause
(i) and to clause (ii) below) immediately prior to such issuance multiplied by
the Conversion Price in effect immediately prior to such issuance, plus
(y) the consideration received by the corporation upon such
issuance, by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon conversion of the Preferred
Stock or deemed to have been issued pursuant to subdivision (3) of this clause
(i) and to clause (ii) below) immediately prior to such issuance plus the
additional shares of Common Stock issued in such issuance (but not including any
additional shares of Common Stock deemed to be issued as a result of any
adjustment in the Conversion Price resulting from such issuance).
For purposes of any adjustment of the Conversion Price pursuant
to this clause (i), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor after
deducting any discounts or commissions paid or incurred by the corporation in
connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined by the
board of directors of the corporation, in the good faith exercise of its
business judgment and in accordance with generally accepted accounting
treatment; provided, however, that if, at the time of such determination, the
corporation's Common Stock is traded in the over-the-counter market or on a
national or regional securities exchange, such fair market value as determined
by the board of directors of the corporation shall not exceed the aggregate
"Current Market Price" (as defined below) of the shares of Common Stock being
issued.
(3) In the case of the issuance of (i) options to purchase
or rights to subscribe for Common Stock (other than Excluded Stock), (ii)
securities by their terms con-
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<PAGE> 6
vertible into or exchangeable for Common Stock (other than Excluded Stock), or
(iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and (2) above), if any,
received by the corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration received by the corporation for any
such securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner provided in
subdivisions (1) and (2) above);
(C) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or conversion of or
exchange for such convertible or exchangeable securities, or on any change in
the minimum purchase price of such options, rights or securities, other than a
change resulting from the antidilution provisions of such options, rights or
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been made upon the basis of
such change or (y) the options or rights related to such securities not
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change; and
(D) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of any
options or rights related to such convertible or exchangeable securities, the
Conversion Price shall forthwith be readjusted to such Conversion Price as would
have obtained had the adjustment made upon the issuance of such options, rights,
convertible or exchangeable securities or options or rights related to such
convertible or exchangeable securities, as the case may be, been made upon the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such convertible or exchangeable securities or upon the exercise of
the options or rights related to such convertible or exchangeable securities, as
the case may be.
(ii) "Excluded Stock" shall mean:
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<PAGE> 7
(A) all shares of Common Stock issued and outstanding on the
date this Certificate of Incorporation is filed with the Delaware Secretary of
State;
(B) all shares of Preferred Stock and the Common Stock into
which the shares of Preferred Stock are convertible; and
(C) all shares of Common Stock, warrants or options to purchase
Common Stock or other securities issued to officers, directors, consultants,
employees and lendors and lessors of the corporation pursuant to any plan or
arrangement approved by the board of directors of the corporation.
All outstanding shares of Excluded Stock (including any shares
issuable upon conversion of the Preferred Stock) shall be deemed to be
outstanding for all purposes of the computations of Section 3(e)(i) above.
(iii) If the number of shares of Common Stock outstanding at any
time after the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then, on
the date such payment is made or such change is effective, the Conversion Price
of each series of Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of any shares of such
series of Preferred Stock shall be increased in proportion to such increase of
outstanding shares.
(iv) If the number of shares of Common Stock outstanding at any time
after the date hereof is decreased by a combination of the outstanding shares of
Common Stock, then, on the effective date of such combination, the Conversion
Price of each series of Preferred Stock shall be appropriately increased so that
the number of shares of Common Stock issuable on conversion of any shares of
such series of Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(v) In case the corporation shall declare a cash dividend upon its
Common Stock payable otherwise than out of retained earnings or shall distribute
to holders of its Common Stock shares of its capital stock (other than Common
Stock), stock or other securities of other persons, evidences of indebtedness
issued by the corporation or other persons, assets (excluding cash dividends) or
options or rights (excluding options to purchase and rights to subscribe for
Common Stock or other securities of the corporation convertible into or
exchangeable for Common Stock), then, in each such case, the holders of shares
of Preferred Stock shall, concurrent with the distribution to holders of Common
Stock, receive a like distribution based upon the number of shares of Common
Stock into which each share of Preferred Stock is convertible.
(vi) In case, at any time after the date hereof, of any capital
reorganization, or any reclassification of the stock of the corporation (other
than as a result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the corporation with or into another
person (other than a consolidation or merger in which the corporation is the
continuing entity and which does not result in any change in the Common Stock),
or of the sale or other disposition of all or substantially all the properties
and assets of the corporation, the shares of Preferred Stock shall, after such
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<PAGE> 8
reorganization, reclassification, consolidation, merger, sale or other
disposition, be convertible into the kind and number of shares of stock or other
securities or property of the corporation or otherwise to which such holder
would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition such holders
had converted such holder's shares of Preferred Stock into Common Stock. The
provisions of this clause (vi) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales or other
dispositions.
(vii) All calculations under this Section 3 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.
(viii) For the purpose of any computation pursuant to this Section
3(e), the "Current Market Price" at any date of one share of Common Stock, shall
be deemed to be the average of the highest reported bid and the lowest reported
offer prices on the preceding business day as furnished by the National
Quotation Bureau, Incorporated (or equivalent recognized source of quotations);
provided, however, that if the Common Stock is not traded in such manner that
the quotations referred to in this clause (viii) are available for the period
required hereunder, Current Market Price shall be determined in good faith by
the board of directors of the corporation, but if challenged by the holders of
more than 50% of the outstanding Preferred Stock, then as determined by an
independent appraiser selected by the board of directors of the corporation, the
cost of such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion Price need
be made if such adjustment would result in a change in the Conversion Price of
less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Conversion Price.
(g) No Impairment. Without the consent of the majority of the
outstanding shares of Preferred Stock, the corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversions of such holder's shares of
Preferred Stock.
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<PAGE> 9
(i) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property or to receive any other right, the corporation
shall mail to each holder of Preferred Stock at least ten (10) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Preferred Stock such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Preferred Stock, the corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of this Section 3
to be given to the holder of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the corporation.
(l) Reissuance of Converted Shares. No shares of Preferred Stock
which have been converted into Common Stock after the original issuance thereof
shall ever again be reissued and all such shares so converted shall upon such
conversion cease to be a part of the authorized shares of the corporation.
4. Voting Rights. Excepts as otherwise required by law, the holder of
each share of Preferred Stock shall be entitled to the number of votes equal to
the number of shares of Common Stock into which each share of Preferred Stock
could be converted on the record date for the vote or written consent of
shareholders and shall have voting rights and powers equal to the voting rights
and powers of the Common Stock. The holder of each share of Preferred Stock
shall be entitled to notice of any shareholders' meeting in accordance with the
bylaws of the corporation and shall vote with holders of the Common Stock upon
the election of directors and upon any other matter submitted to a vote of
shareholders, except those matters required by law to be submitted to a class
vote. Fractional votes shall not, however, be permitted and any fractional
voting rights resulting from the above formula (after aggregating all shares of
Common Stock into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half rounded
upward to one).
5. Protective Provisions. In addition to any other class vote that may
be required by law, so long as any shares of Preferred Stock are outstanding,
this corporation shall not without first
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obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Preferred Stock
(voting as a single class):
(a) amend or repeal any provision of, or add any provision to, the
corporation's Certificate of Incorporation or Bylaws if such action would
materially alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock,
or increase or decrease the number of shares of Preferred Stock authorized
hereby;
(b) authorize or issue shares of any class or series of stock not
authorized herein having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock; or authorize or issue shares of stock of any class or series of
any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having option rights to purchase, any shares of stock of
this corporation having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock;
(c) reclassify any class or series of any Common Stock into shares
having any preference or priority as to dividends or assets superior to or on a
parity with any such preference or priority of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock;
(d) apply any of its assets to the redemption, retirement, purchase
or acquisition, directly or indirectly, through subsidiaries (as defined in
Section 425 of the Internal Revenue Code of 1986, as amended (the "Code") or
otherwise, of any shares of any class or series of Common Stock, except from
employees, advisors, officers, directors and consultants of, and persons
performing services for, this corporation or its subsidiaries on terms approved
by the board of directors upon termination of employment or association;
(e) do any act or thing which would result in taxation of the
holders of shares of the Preferred Stock under Section 305 of the Code (or any
comparable provision of the Code as hereafter from time to time amended);
(f) (i) sell, convey or otherwise dispose of all or substantially
all of its property or business, or (ii) merge into or consolidate with any
other corporation (other than a wholly owned subsidiary corporation) or effect
any other transaction of series of related transactions disposing of more than
50% of the voting power of the corporation.
6. Status of Converted Stock. In the event any shares of Preferred
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be canceled and shall not be issuable by the corporation, and the
Certificate of Incorporation of this corporation shall be appropriately amended
to effect the corresponding reduction in the corporation's authorized capital
stock.
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7. Residual Rights. All rights accruing to the outstanding shares of
the corporation not expressly provided for to the contrary in this Article V
shall be vested with the Common Stock.
ARTICLE VI
This corporation reserves the right to amend, alter, change, or repeal
any provision contained is this Certificate of Incorporation, in the manner now
or hereafter prescribed by the statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VII
This corporation is to have perpetual existence.
ARTICLE VIII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of this corporation shall not be personally
liable to this corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
2. Indemnification. This corporation may indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of this corporation, or any predecessor of
this corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of this corporation or any predecessor to
this corporation.
3. Amendments. Neither any amendment nor repeal of this Article VIII,
nor the adoption of any provision of this corporation's Certificate of
Incorporation inconsistent with this Article VIII, shall eliminate or reduce the
effect of this Article VIII, in respect of any matter occurring, or any action
or proceeding accruing or arising or that, but for this Article VIII, would
accrue or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
ARTICLE IX
In the event that any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by this corporation.
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ARTICLE X
Holders of stock of any class or series of this corporation shall not
be entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting is
required pursuant to Sections 2115 and/or 301.5 of the California Corporations
Code, in which event each such holder shall be entitled to as many votes as
shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be voted
for, or for any two or more of them as such holder may see fit, so long as the
name of the candidate for director shall have been placed in nomination prior to
the voting and the stockholder, or any other holder of the same class or series
of stock, has given notice at the meeting prior to the voting of the intention
to cumulate votes.
ARTICLE XI
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Bylaws of
this corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless a stockholder demands election by written ballot at any
stockholder meeting and before voting begins, or unless the Bylaws of this
corporation shall so provide.
ARTICLE XII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of this corporation.
The undersigned sole incorporator of Symyx Technologies, Inc. hereby
acknowledges that the above Amended and Restated Certificate of Incorporation of
Symyx Technologies, Inc. is her act and deed and that the facts stated therein
are true.
/s/ JERYL HILLEMAN
----------------------------------
Jeryl Hilleman
Dated: January 28, 1999
<PAGE> 1
EXHIBIT 3.1(b)
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SYMYX TECHNOLOGIES, INC.
Symyx Technologies, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Symyx Technologies, Inc. The
corporation was originally incorporated under the same name, and the original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on October 5, 1998.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation restates and
amends the provisions of the Certificate of Incorporation of the corporation.
C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:
ARTICLE I
The name of this corporation is Symyx Technologies, Inc.
ARTICLE II
The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The corporation is authorized to issue two classes of shares of stock to
be designated, respectively, Common Stock, $0.001 par value, and Preferred
Stock, $0.001 par value. The total number of shares that the corporation is
authorized to issue is 110,000,000 shares. The number of shares of Common Stock
authorized is 100,000,000. The number of shares of Preferred authorized is
10,000,000.
<PAGE> 2
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the board of directors (authority to do so being hereby expressly
vested in the board). The board of directors is further authorized to determine
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and to fix the number
of shares of any series of Preferred Stock and the designation of any such
series of Preferred Stock. The board of directors, within the limits and
restrictions stated in any resolution or resolutions of the board of directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
The authority of the board of directors with respect to each such class
or series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the
number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or
series shall be declared and paid, or set aside for payment, whether dividends
at the rate so determined shall be cumulative or accruing, and whether the
shares of such class or series shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so, on what
terms;
(c) the right or obligation, if any, of the corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and
the amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the corporation;
(e) the terms and conditions, if any, upon which shares of such
class or series shall be convertible into, or exchangeable for, shares of
capital stock of any other class or series, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem
or purchase shares of such class or series pursuant to a sinking fund or fund of
a similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares
of such class or series or any shares of any other class or series of Preferred
Stock;
(h) limitations, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of Preferred
Stock; and
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(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the board of directors of the
corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
ARTICLE V
The corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VI
The corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the corporation, or any predecessor of
the corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the corporation or any predecessor to the
corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII, nor
the adoption of any provision of the corporation's Certificate of Incorporation
inconsistent with this Article VII, shall eliminate or reduce the effect of this
Article VII, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by the corporation.
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ARTICLE IX
Holders of stock of any class or series of the corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting is
required pursuant to Sections 2115 or 301.5 of the California General
Corporation Law, in which event each such holder shall be entitled to as many
votes as shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be voted
for, or for any two or more of them as such holder may see fit, so long as the
name of the candidate for director shall have been placed in nomination prior to
the voting and the stockholder, or any other holder of the same class or series
of stock, has given notice at the meeting prior to the voting of the intention
to cumulate votes.
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Amended
and Restated Bylaws of the corporation. The directors shall be divided into
three classes with the term of office of the first class (Class I) to expire at
the annual meeting of stockholders held in 2000; the term of office of the
second class (Class II) to expire at the annual meeting of stockholders held in
2001; the term of office of the third class (Class III) to expire at the annual
meeting of stockholders held in 2002; and thereafter for each such term to
expire at each third succeeding annual meeting of stockholders after such
election.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Amended and Restated Bylaws of the corporation shall so
provide.
ARTICLE X
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Amended and Restated Bylaws of the corporation.
ARTICLE XI
No action shall be taken by the stockholders of the corporation except at an
annual or special meeting of the stockholders called in accordance with the
Amended and Restated Bylaws and no action shall be taken by the stockholders by
written consent. The affirmative vote of sixty-six and two-thirds percent (66
2/3%) of the then outstanding voting securities of the corporation, voting
together as a single class, shall be required for the amendment, repeal or
modification of the provisions of Article IX, Article X or Article XII of this
Amended and Restated Certificate of Incorporation or Sections 2.3 (Special
Meeting), 2.4 (Notice of Stockholders' Meeting), 2.5 (Advanced Notice of
Stockholder Nominees and Stockholder Business), 2.10 (Voting), or 2.12
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(Stockholder Action by Written Consent Without a Meeting), or 3.2 (Number of
Directors) of the corporation's Amended and Restated Bylaws.
ARTICLE XII
Meetings of stockholders may be held within or without the State of
Delaware, as the Amended and Restated Bylaws may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Amended and Restated
Bylaws of the corporation.
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IN WITNESS WHEREOF, Symyx Technologies, Inc. has caused this certificate
to be signed by Steven D. Goldby, its Chief Executive Officer, ____ this day of
______, 1999.
--------------------------------------------
Steven D. Goldby, Chief Executive Officer
<PAGE> 1
EXHIBIT 3.2(a)
BYLAWS
OF
SYMYX TECHNOLOGIES, INC.
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
CORPORATE OFFICES...................................................................................1
1.1 REGISTERED OFFICE.......................................................................1
1.2 OTHER OFFICES...........................................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS............................................................................1
2.1 PLACE OF MEETINGS.......................................................................1
2.2 ANNUAL MEETING..........................................................................1
2.3 SPECIAL MEETING.........................................................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS........................................................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE............................................2
2.6 QUORUM..................................................................................2
2.7 ADJOURNED MEETING; NOTICE...............................................................3
2.8 CONDUCT OF BUSINESS.....................................................................3
2.9 VOTING..................................................................................3
2.10 WAIVER OF NOTICE........................................................................4
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................................4
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.............................4
2.13 PROXIES.................................................................................5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE...................................................5
ARTICLE III
DIRECTORS...........................................................................................6
3.1 POWERS..................................................................................6
3.2 NUMBER OF DIRECTORS.....................................................................6
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.................................6
3.4 RESIGNATION AND VACANCIES...............................................................6
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE................................................7
3.6 REGULAR MEETINGS........................................................................8
3.7 SPECIAL MEETINGS; NOTICE................................................................8
3.8 QUORUM..................................................................................8
3.9 WAIVER OF NOTICE........................................................................8
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.......................................9
3.11 FEES AND COMPENSATION OF DIRECTORS......................................................9
3.12 APPROVAL OF LOANS TO OFFICERS...........................................................9
3.13 REMOVAL OF DIRECTORS....................................................................9
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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ARTICLE IV
COMMITTEES.........................................................................................10
4.1 COMMITTEES OF DIRECTORS................................................................10
4.2 COMMITTEE MINUTES......................................................................10
4.3 MEETINGS AND ACTION OF COMMITTEES......................................................11
ARTICLE V
OFFICERS...........................................................................................11
5.1 OFFICERS...............................................................................11
5.2 APPOINTMENT OF OFFICERS................................................................11
5.3 SUBORDINATE OFFICERS...................................................................11
5.4 REMOVAL AND RESIGNATION OF OFFICERS....................................................11
5.5 VACANCIES IN OFFICES...................................................................12
5.6 CHAIRMAN OF THE BOARD..................................................................12
5.7 PRESIDENT..............................................................................12
5.8 VICE PRESIDENTS........................................................................12
5.9 SECRETARY..............................................................................13
5.10 CHIEF FINANCIAL OFFICER................................................................13
5.11 ASSISTANT SECRETARY....................................................................13
5.12 ASSISTANT TREASURER....................................................................14
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.........................................14
5.14 AUTHORITY AND DUTIES OF OFFICERS.......................................................14
ARTICLE VI
INDEMNIFICATION....................................................................................14
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS..............................................14
6.2 INDEMNIFICATION OF OTHERS..............................................................15
6.3 INSURANCE..............................................................................16
ARTICLE VII
RECORDS AND REPORTS................................................................................16
7.1 MAINTENANCE AND INSPECTION OF RECORDS..................................................16
7.2 INSPECTION BY DIRECTORS................................................................16
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.......................................................17
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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ARTICLE VIII
GENERAL MATTERS....................................................................................17
8.1 CHECKS.................................................................................17
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.......................................17
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.................................................17
8.4 SPECIAL DESIGNATION ON CERTIFICATES....................................................18
8.5 LOST CERTIFICATES......................................................................18
8.6 CONSTRUCTION; DEFINITIONS..............................................................19
8.7 DIVIDENDS..............................................................................19
8.8 FISCAL YEAR............................................................................19
8.9 SEAL...................................................................................19
8.10 TRANSFER OF STOCK......................................................................19
8.11 STOCK TRANSFER AGREEMENTS..............................................................20
8.12 REGISTERED STOCKHOLDERS................................................................20
ARTICLE IX
AMENDMENTS.........................................................................................20
ARTICLE X
CALIFORNIA CORPORATIONS CODE.......................................................................20
10.1 APPLICATION OF CALIFORNIA CORPORATIONS CODE............................................20
10.2 ANNUAL REPORT TO STOCKHOLDERS; WAIVER..................................................21
</TABLE>
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ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Service Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation the annual meeting of shareholders shall be held on the second
Tuesday of April of each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding business day. At the meeting, directors shall be elected and any
other proper business may be transacted.
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2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, the chairman of the board, the chief executive officer or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the Chairman of the meeting or (ii)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
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2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS
The chairman of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of business.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of Section 2.12 of these
bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of
incorporation or these bylaws, each stockholder shall be entitled to one vote
for each share of capital stock held by such stockholder and stockholders shall
not be entitled to cumulate their votes in the election of directors or with
respect to any matter submitted to a vote of the stockholders.
Notwithstanding the foregoing, if the stockholders of the
corporation are entitled, pursuant to Sections 2115 and 301.5 of the California
Corporations Code, to cumulate their votes in the election of directors, each
such stockholder shall be entitled to cumulate votes (i.e., cast for any
candidate a number of votes greater than the number of votes that such
stockholder normally is entitled to cast) only if the candidates' names have
been properly placed in nomination (in accordance with these bylaws) prior to
commencement of the voting, and the stockholder requesting cumulative voting has
given notice prior to commencement of the voting of the stockholder's intention
to cumulate votes. If cumulative voting is properly requested, each holder of
stock, or of any class or classes or of a series or series thereof, who elects
to cumulate votes shall be entitled to as many votes as equals the number of
votes that (absent this provision as to cumulative voting) he or she would be
entitled to cast for the election of directors with respect to his or her shares
of stock multiplied by the number of directors to be elected by him, and he or
she may cast all of such votes for a single director or may distribute them
among the number to be voted for, or for any two or more of them, as he or she
may see fit.
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2.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which
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notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.
(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.13 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
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ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be eleven (11). This
Section 3.2 may be amended by a bylaw duly adopted by the board of directors or
by the stockholders subject to the provisions of the certificate of
incorporation, or by a duly adopted amendment to the certificate of
incorporation.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
attention of the Secretary of the corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office for
a term expiring at the next annual meeting of
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the stockholders at which the term of office of the class to which such director
has been elected expires.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
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3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or
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members of a committee of directors, need be specified in any written waiver
of notice unless so required by the certificate of incorporation or these
bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.12 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.13 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so long as shareholders of the corporation are entitled to cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire board of
directors.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting),
with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the board of directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee, that special
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meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board
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of directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates evidencing such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all his transactions as chief financial officer and of the financial condition
of the corporation, and shall have other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
The chief financial officer shall be the treasurer of the corporation.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as may be
prescribed by the board of directors or these bylaws.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the
assistant treasurers, in the order determined by the stockholders or board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the chief financial officer or in the event
of his or her inability or refusal to act, perform the duties and exercise the
powers of the chief financial officer and shall perform such other duties and
have such other powers as may be prescribed by the board of directors or these
bylaws.
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5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
5.14 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that
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payment of expenses incurred by a director or officer of the corporation in
advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by the director or officer to repay all
amounts advanced if it should ultimately be determined that the director of
officer is not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
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ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
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ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the
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total amount of the consideration to be paid therefor and the amount paid
thereon shall be stated. Upon the declaration of any dividend on fully paid
shares, the corporation shall declare a dividend upon partly paid shares of the
same class, but only upon the basis of the percentage of the consideration
actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in (i) the General Corporation Law of Delaware or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
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The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by
the stockholders entitled to vote; provided, however, that the corporation may,
in its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.
ARTICLE X
CALIFORNIA CORPORATIONS CODE
10.1 APPLICATION OF CALIFORNIA CORPORATIONS CODE
For so long as the corporation is qualified as a foreign corporation
and is subject to Section 2115 of the California Corporations Code, it shall be
subject to the applicable provisions of such Code.
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10.2 ANNUAL REPORT TO STOCKHOLDERS; WAIVER
To the extent that Section 1501 of the California Corporations Code
shall apply to the corporation, the board of directors shall cause an annual
report to be sent to the stockholders not later than one hundred twenty days
after the close of the fiscal year adopted by the corporation. Such report shall
be sent at least fifteen days (or, if sent by third-class mail, thirty-five
days) before the annual meeting of stockholders to be held during the next
fiscal year and in the manner specified in these bylaws for giving notice to
stockholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred holders of
record.
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EXHIBIT 3.2(b)
AMENDED AND RESTATED BYLAWS
OF
SYMYX TECHNOLOGIES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I CORPORATE OFFICES......................................................................1
1.1 REGISTERED OFFICE.................................................................1
1.2 OTHER OFFICES.....................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..............................................................1
2.1 PLACE OF MEETINGS.................................................................1
2.2 ANNUAL MEETING....................................................................1
2.3 SPECIAL MEETING...................................................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS...................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................3
2.7 QUORUM............................................................................3
2.8 ADJOURNED MEETING; NOTICE.........................................................4
2.9 CONDUCT OF BUSINESS...............................................................4
2.10 VOTING............................................................................4
2.11 WAIVER OF NOTICE..................................................................5
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING...........................5
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.......................5
2.14 PROXIES...........................................................................6
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................6
ARTICLE III DIRECTORS............................................................................7
3.1 POWERS............................................................................7
3.2 NUMBER OF DIRECTORS...............................................................7
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS...........................7
3.4 RESIGNATION AND VACANCIES.........................................................8
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..........................................8
3.6 REGULAR MEETINGS..................................................................9
3.7 SPECIAL MEETINGS; NOTICE..........................................................9
3.8 QUORUM............................................................................9
3.9 WAIVER OF NOTICE.................................................................10
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................................10
3.11 FEES AND COMPENSATION OF DIRECTORS...............................................10
3.12 APPROVAL OF LOANS TO OFFICERS....................................................10
3.13 REMOVAL OF DIRECTORS.............................................................10
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV COMMITTEES...........................................................................11
4.1 COMMITTEES OF DIRECTORS..........................................................11
4.2 COMMITTEE MINUTES................................................................11
4.3 MEETINGS AND ACTION OF COMMITTEES................................................11
ARTICLE V OFFICERS..............................................................................12
5.1 OFFICERS.........................................................................12
5.2 APPOINTMENT OF OFFICERS..........................................................12
5.3 SUBORDINATE OFFICERS.............................................................12
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES...........................12
5.5 CHAIRMAN OF THE BOARD............................................................13
5.6 CHIEF EXECUTIVE OFFICER..........................................................13
5.7 PRESIDENT........................................................................13
5.8 VICE PRESIDENTS..................................................................13
5.9 SECRETARY........................................................................14
5.10 CHIEF FINANCIAL OFFICER..........................................................14
5.11 ASSISTANT SECRETARY..............................................................14
5.12 ASSISTANT TREASURER..............................................................15
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...................................15
5.14 AUTHORITY AND DUTIES OF OFFICERS.................................................15
ARTICLE VI INDEMNITY............................................................................15
6.1 THIRD PARTY ACTIONS..............................................................15
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION....................................16
6.3 SUCCESSFUL DEFENSE...............................................................16
6.4 DETERMINATION OF CONDUCT.........................................................16
6.5 PAYMENT OF EXPENSES IN ADVANCE...................................................17
6.6 INDEMNITY NOT EXCLUSIVE..........................................................17
6.7 INSURANCE INDEMNIFICATION........................................................17
6.8 THE CORPORATION..................................................................17
6.9 EMPLOYEE BENEFIT PLANS...........................................................18
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES......................18
ARTICLE VII RECORDS AND REPORTS.................................................................18
7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................18
7.2 INSPECTION BY DIRECTORS..........................................................19
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.................................................19
ARTICLE VIII GENERAL MATTERS....................................................................19
8.1 CHECKS...........................................................................19
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.................................20
</TABLE>
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<TABLE>
<S> <C>
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES...........................................20
8.4 SPECIAL DESIGNATION ON CERTIFICATES..............................................20
8.5 LOST CERTIFICATES................................................................21
8.6 CONSTRUCTION; DEFINITIONS........................................................21
8.7 DIVIDENDS........................................................................21
8.8 FISCAL YEAR......................................................................21
8.9 SEAL.............................................................................22
8.10 TRANSFER OF STOCK................................................................22
8.11 STOCK TRANSFER AGREEMENTS........................................................22
8.12 REGISTERED STOCKHOLDERS..........................................................22
ARTICLE IX AMENDMENTS...........................................................................22
</TABLE>
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<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
SYMYX TECHNOLOGIES, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, either within or
without the State of Delaware, as may be designated by the board of directors or
in the manner provided in these bylaws. In the absence of any such designation,
stockholders' meetings shall be held at the registered office of the corporation
in the State of Delaware.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Tuesday of June of each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding business day. At the meeting, directors shall be elected and any
other proper business may be transacted.
<PAGE> 6
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the chief executive
officer, or by the president.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.6 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
(i) nominations for the election of directors, and
(ii) business proposed to be brought before any stockholder
meeting
may be made by the board of directors or proxy committee appointed by the board
of directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of their intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than one hundred twenty (120) calendar days in advance of the first
anniversary date of mailing of the corporation's proxy statement released to
stockholders
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in connection with the previous year's annual meeting of stockholders; provided,
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than thirty (30) days
from the date contemplated at the time of the previous year's proxy statement,
notice by the stockholder to be timely must be so received a reasonable time
before the solicitation is made. To be in proper form, a stockholder's notice to
the secretary shall set forth:
(a) the name and address of the stockholder who intends to
make the nominations or propose the business and, as the case may be, of
the person or persons to be nominated or of the business to be proposed;
(b) a representation that the stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting and,
if applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(c) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the nominee been
nominated, or intended to be nominated, or the matter been proposed, or
intended to be proposed by the board of directors; and
(e) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the
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<PAGE> 8
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum is not
present or represented at any meeting of the stockholders, then either (i) the
Chairman of the meeting or (ii) the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 CONDUCT OF BUSINESS
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.
2.10 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.13 of these bylaws,
subject to the provisions of Sections 217 and 218 of the Delaware General
Corporation Law (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
Notwithstanding the foregoing, if the stockholders of the corporation
are entitled, pursuant to Sections 2115 and 301.5 of the California Corporations
Code, to cumulate their votes in the election of directors, each such
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes that such stockholder normally
is entitled to cast) only if the candidates' names have been properly placed in
nomination (in accordance with these restated Bylaws) prior to commencement of
the voting, and the stockholder requesting cumulative voting has given notice
prior to commencement of the voting of the stockholder's intention to cumulate
votes. If cumulative voting is properly requested, each holder of stock, or of
any class or classes or of a series or series thereof, who elects to cumulate
votes shall be entitled to as many votes
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<PAGE> 9
as equals the number of votes that (absent this provision as to cumulative
voting) he or she would be entitled to cast for the election of directors with
respect to his or her shares of stock multiplied by the number of directors to
be elected by him, and he or she may cast all of such votes for single director
or may distribute them among the number to be voted for, or for any two or more
of them, as he or she may see fit.
2.11 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver, signed by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these bylaws.
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
a corporation, or any action that may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the
Delaware General Corporation Law if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the Delaware General Corporation Law.
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change,
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<PAGE> 10
conversion or exchange of stock or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the first date on which
a signed written consent is delivered to the corporation.
(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.14 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by a written
proxy, signed by such stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if such stockholder's name is placed on the proxy by any
reasonable means including, but not limited to, by facsimile signature, manual
signature, typewriting, telegraphic transmission or otherwise, by such
stockholder or such stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the Delaware General Corporation Law.
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
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so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Delaware General Corporation Law and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall consist of ten (10) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation. Upon the closing of the first sale of the
corporation's common stock pursuant to a firmly underwritten registered public
offering (the "IPO"), the directors shall be divided into three classes, with
the term of office of the first class, which class shall initially consist of
three directors, to expire at the first annual meeting of stockholders held
after the IPO; the term of office of the second class, which shall initially
consist of three directors, to expire at the second annual meeting of
stockholders held after the IPO; the term of office of the third class, which
class shall initially consist of four directors, to expire at the third annual
meeting of stockholders held after the IPO; and thereafter for each such term to
expire at each third succeeding annual meeting of stockholders held after such
election.
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
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Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the attention
of the Secretary of the corporation. When one or more directors shall resign
from the board of directors, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the Delaware General Corporation Law.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the
Delaware General Corporation Law as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
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Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of such board of directors, or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting pursuant to this section shall constitute
presence in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute, the certificate of incorporation, or
these bylaws. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
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3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law, the certificate of incorporation, or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when such person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.12 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.13 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so long as stockholders of the corporation are entitled to cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect such director if then cumulatively voted at an election of the entire
board
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of directors or, if there be classes of directors, at an election of the class
of directors of which such director is a part.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority (i) approving or adopting or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending, or repealing any bylaws of the corporation; and, unless
the board resolution establishing the committee, the bylaws or the certificate
of incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting),
with such
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changes in the context of those bylaws as are necessary to substitute the
committee and its members for the board of directors and its members; provided,
however, that the time of regular meetings of committees may be determined
either by resolution of the board of directors or by resolution of the
committee, that special meetings of committees may also be called by resolution
of the board of directors and that notice of special meetings of committees
shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
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Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.5 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to the
chairman of the board by the board of directors or as may be prescribed by these
bylaws. If there is no president and no one has been appointed chief executive
officer, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.6 of these bylaws.
5.6 CHIEF EXECUTIVE OFFICER
The board of directors shall select a chief executive officer of the
corporation who shall be subject to the control of the board of directors and
have general supervision, direction and control of the business and the officers
of the corporation. The chief executive officer shall preside at all meetings of
the stockholders and, in the absence or nonexistence of a chairman of the board,
at all meetings of the board of directors.
5.7 PRESIDENT
The president shall have the general powers and duties of management
usually vested in the office of president of a corporation and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws. In addition and subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if no one has been
appointed chief executive officer, the president shall be the chief executive
officer of the corporation and shall, subject to the control of the board of
directors, have the powers and duties described in Section 5.6.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
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5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. The secretary shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. The chief financial officer shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all his transactions as chief financial officer and of the
financial condition of the corporation, and shall have other powers and perform
such other duties as may be prescribed by the board of directors or these
bylaws.
The chief financial officer shall be the treasurer of the corporation.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or
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refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as may be prescribed
by the board of directors or these bylaws.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the chief financial officer or in the event of his or
her inability or refusal to act, perform the duties and exercise the powers of
the chief financial officer and shall perform such other duties and have such
other powers as may be prescribed by the board of directors or these bylaws.
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
5.14 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred
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by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interest of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) and amounts paid in settlement (if such settlement is approved in advance
by the corporation, which approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding any other
provision of this Article VI, no person shall be indemnified hereunder for any
expenses or amounts paid in settlement with respect to any action to recover
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended.
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification
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of the director, officer, employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Sections 6.1 and 6.2. Such determination shall be made (1) by the Board of
Directors or the Executive Committee by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding or (2) or
if such quorum is not obtainable or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders. Notwithstanding the foregoing, a director,
officer, employee or agent of the Corporation shall be entitled to contest any
determination that the director, officer, employee or agent has not met the
applicable standard of conduct set forth in Sections 6.1 and 6.2 by petitioning
a court of competent jurisdiction.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
Section 6.1 or 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person
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who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
and subject to the provisions of this Article VI (including, without limitation
the provisions of Section 6.4) with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or
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other agent is the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing that
authorizes the attorney or other agent so to act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in Delaware or at its principal place of business.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
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8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General
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Corporation Law of Delaware, in lieu of the foregoing requirements there may be
set forth on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, the designations, the preferences, and the relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in (i) the Delaware General Corporation Law or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
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8.9 SEAL
The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the Delaware General Corporation Law.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by the
stockholders entitled to vote; provided, however, that the corporation may, in
its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.
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CERTIFICATE OF ADOPTION OF
AMENDED AND RESTATED BYLAWS
OF
SYMYX TECHNOLOGIES, INC.
Certificate by Secretary
The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of Symyx Technologies, Inc. and that the foregoing Amended
and Restated Bylaws, comprising twenty-two (22) pages, were adopted as the
Amended and Restated Bylaws of the corporation on __________, 1999 by the board
of directors of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this ____ day of _________ 1999.
_____________________________________
Mario M. Rosati, Secretary
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EXHIBIT 10.1
RESTATED INVESTOR RIGHTS AGREEMENT
This Restated Investor Rights Agreement (the "Agreement") is effective
as of March 27, 1998 by and among Symyx Technologies, a California corporation
(the "Company"), and the holders of the Company's Preferred Stock (the
"Investors").
RECITALS
A. Pursuant to a Restated Investors Rights Agreement dated as of July
29, 1997 (the "Prior Rights Agreement"), the Company has granted certain rights
to the holders of its Series A, Series B and Series C Preferred Stock.
B. The Company intends to enter into one or more Series D Preferred
Stock Purchase Agreements, the first of which is of even date herewith
(collectively, the "Series D Agreement") and to sell and issue pursuant to such
Series D Agreement shares of Series D Preferred Stock. In connection with the
Series D Agreement, the Company and the parties to the Prior Rights Agreement
desire to restate the Prior Rights Agreement to provide all holders of Preferred
Stock the rights set forth herein. The shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
sold pursuant the Series D Agreement and the shares of Section 10 Common Stock
(as defined in the initial Series D Agreement dated March 27, 1998) if and when
sold pursuant to the initial Series D Agreement dated March 27, 1998 and the
Common Stock Purchase Agreement (as defined in Section 10 of the initial Series
D Agreement dated March 27, 1998) are collectively referred to herein as the
"Preferred Shares."
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. Registration Rights.
1.1 Definitions. For purposes of this Section 1:
(a) The term "register", "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Common Stock
issued upon conversion of the Company's outstanding Preferred Stock, (2) the
Section 10 Common Stock (as defined in the Series D Agreement of even date
herewith) when and if issued and (3) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Preferred Stock or Common Stock,
excluding in all
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cases, however, (i) any Registrable Securities sold by a person in a transaction
in which such person's rights under this Section 1 are not properly assigned in
accordance with Section 1.12 hereof, or (ii) any Registrable Securities sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by reference to the number of shares of Common
Stock outstanding, and the number of shares of Common Stock issuable pursuant to
then exercisable or convertible securities, which are Registrable Securities;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12 hereof;
(e) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the United States Securities and Exchange Commission (the "SEC")
which permits inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC; and
(f) The term "Act" shall mean the Securities Act of 1933, as
amended.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier
of (i) May 15, 2000 or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or similar
plan or a SEC Rule 145 transaction), a written request from the Holders of at
least forty percent (40%) of the Registrable Securities then outstanding
(including securities convertible into Registrable Securities) that the Company
file a registration statement under the Act covering the registration of at
least eighty percent (80%) of Registrable Securities, or any lesser number of
shares if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $10,000,000, then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of Section 1.2(b), effect
as soon as practicable, and in any event within 90 days of the receipt of such
request, the registration under the Act of all Registrable Securities which the
Holders request to be registered within twenty (20) days of the mailing of such
written notice by the Company; provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 1.2(a):
(i) During the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date
ninety (90) days immediately following the effective date of, any registration
statement pertaining to securities of the Company
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(other than a registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), provided that the Company is actively
employing in good faith its commercially reasonable best efforts to cause such
registration statement to become effective;
(ii) After the Company has effected one such registration
pursuant to this Section 1.2(a), and such registration has been declared or
ordered effective; or
(iii) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed at such
time, then the Company's obligation to use its best efforts to register, qualify
or comply under this Section 1.2(a) shall be deferred for a period not to exceed
ninety (90) days from the date of receipt of written request from the Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period.
(b) If the Holders initiating the registration request hereunder
(the "Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
Section 1.2(a). In such event, the right of any Holder to include such Holder's
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in Section
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities owned by each Holder.
1.3 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company
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shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of written notice by the Company, the Company shall, subject
to the provisions of Section 1.8, cause to be registered under the Act all of
the Registrable Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section
1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement provided that such underwriting agreement
shall not provide for indemnification or contribution obligations on the part of
the Holders greater than the obligations set forth in Section 1.9(b).
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
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state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Use best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, an opinion, dated such date,
of the counsel representing the Company for the purposes of such registration
and "comfort letters" and updates thereto from the Company's independent
auditors, in each case in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.6 Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions, incurred in connection with the
registration, filing or qualification pursuant to Section 1.2, including all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
Participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to a demand
registration pursuant to Section 1.2; provided further, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request, then the Holders shall not be required to
pay any of such expenses and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.12), including all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
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1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as reasonably agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company; provided
that such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of the Holders greater than the obligations
set forth in Section 1.9(b). If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders). For purposes of apportionment, any selling
shareholder which is a Holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder", and any pro rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder", as defined in this sentence.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, amended (the
"1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Act, the 1934
Act, or any other federal or state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses
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reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 1.9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information relating to such Holder furnished expressly
for use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information relating to such Holder furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Section 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 1.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Section 1.9(b) exceed
the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action,
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shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.9, but the omission to so deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for paragraphs (a) through
(c) of this Section 1.9 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein, then
each indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and the Holder of such Registrable Securities, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any notice under paragraph (c).
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact relates to
information supplied by the Company, on the one hand, or the underwriters or the
Holders of such Registrable Securities, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each of the Holders agrees
that it would not be just and equitable if contributions pursuant to this
paragraph were determined by pro rata allocation (even if all of the Holders of
such Registrable Securities were treated as one entity for such purpose) or by
any other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or action in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, no Holder shall be
required to contribute any amount in excess of the lesser of (i) the proportion
that the public offering price of shares sold by such Holder under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by such
Holder for the sale of Registrable Securities covered by such registration
statement and (ii) the amount of any damages which they would have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or
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regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.11 Form S-3 Registration.
(a) In case the Company shall receive from any Holder or
Holders a written request or requests that the Company effect a registration on
Form S-3, which may be a shelf registration under Rule 415 under the Act, and
any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(ii) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are
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specified in such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in a written request given within fifteen (15) days after receipt of
such written notice from the Company and keep such registration effective for up
to ninety (90) days, unless such registration is a shelf registration pursuant
to Rule 415 under the Act, in which case the Company shall maintain its
effectiveness until such time as none of the Registrable Securities registered
thereon would be deemed to be "restricted securities" pursuant to Rule 144 under
the Act and such Holders would not be deemed to be "affiliates" of the Company
under Rule 144; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 1.11: (1) if Form S-3 is not available for such offering by the Holders;
(2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$500,000; (3) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
1.11; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period; (4) if the Company has already effected
one registration on Form S-3 in the calendar year for the Holders pursuant to
this Section 1.11; or (5) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(b) If the Holders initiating the registration request hereunder
(the "S-3 Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as part of their request made pursuant to this Section 1.11 and the
Company shall include such information in the written notice referred to in
Section 1.11(a)(i). In such event, the right of any Holder to include such
Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the S-3 Initiating Holders and such Holder)
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in Section 1.4(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by a
majority in interest of the S-3 Initiating Holders. Notwithstanding any other
provision of this Section 1.11, if the underwriter advises the S-3 Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the S-3 Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
S-3
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<PAGE> 11
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 1.11, including all registration,
filing, qualification, printer's and accounting fees and the reasonable fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding any underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the Company. Registrations effected pursuant to
this Section 1.11 shall not be counted as demands for registration or
registrations effected pursuant to Section 1.2 or 1.3, respectively.
1.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee who acquires at least 500,000
shares of Registrable Securities, provided the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. Notwithstanding the above, such rights may be assigned
by a Holder to a limited partner, general partner or other affiliate of an
Investor (the "Transferee") regardless of the number of shares acquired by such
Transferee.
1.13 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder to include such securities in any registration filed under Section 1.2
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of a Holder's securities will not reduce the amount of the
Registrable Securities of the Holders which is included.
1.14 "Market Stand-Off" Agreement. Each holder of securities which
are or at one time were Registrable Securities (or which are or were convertible
into Registrable Securities) hereby agrees that, during a period not to exceed
180 days, following the effective date of a registration statement of the
Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, sell or otherwise transfer or dispose of (other
than to a donee who agrees to be similarly bound) any Common Stock of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
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(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company enter into similar
agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.15 Termination of Registration Rights. No shareholder shall be
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
initial firm commitment underwritten offering of its securities to the general
public.
2. Right of First Offer.
2.1 Grant of Right. Subject to the terms and conditions specified in
this Section 2, the Company hereby grants to each Investor a right of first
offer with respect to future sales by the Company of its Future Shares (as
hereinafter defined).
2.2 Future Shares. "Future Shares" shall mean shares of any capital
stock of the Company, whether now authorized or not, and any rights, options or
warrants to purchase such capital stock, and securities of any type that are, or
may become, convertible into such capital stock; provided however, that "Future
Shares" do not include (i) the shares of Preferred Stock or the Common Stock
issued or issuable upon the conversion of such Preferred Stock, (ii) the shares
of Common Stock issued or issuable upon the conversion of Class B Common Stock
(iii) securities offered pursuant to a registration statement filed under the
Act, (iv) securities issued pursuant to the acquisition of another corporation
by the Company by merger of, purchase of substantially all of the assets or
other reorganization, (v) securities issued in connection with or as
consideration for a collaborative partnership arrangement, acquisition or
licensing of technology or other significant assets to be used in the Company's
business and (vi) securities issued or issuable to officers, directors,
employees or consultants of the Company pursuant to any employee or consultant
stock offering, plan or arrangement approved by the Board of Directors of the
Company.
2.3 Notice. In the event the Company proposes to offer any of its
Future Shares, the Company shall first make an offering of such Future Shares to
each Investor in accordance with the following provisions:
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(a) The Company shall deliver a notice by certified mail (the
"Notice") to the Investors stating (i) its bona fide intention to offer such
Future Shares, (ii) the number of such Future Shares to be offered, (iii) the
price, if any, for which it proposes to offer such Future Shares, and (iv) a
statement as to the number of days from receipt of such Notice within which the
Investor must respond to such Notice.
(b) Within 20 calendar days after receipt of the Notice, the
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Future Shares which equals
the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Preferred Shares then held, by such Investor
bears to the total number of shares of Common Stock issued and outstanding,
including shares issuable upon conversion of convertible securities issued and
outstanding, and outstanding warrants and options. The Company shall promptly,
in writing, inform each Investor which purchases all the Future Shares available
to it (the "Fully-Exercising Investor") of any other Investor's failure to do
likewise. During the ten-day period commencing after receipt of such
information, each Fully-Exercising Investor shall be entitled to obtain that
portion of the Future Shares offered to the Investors which was not subscribed
for, which is equal to the proportion that the number of shares of Common Stock
issued and held, or issuable upon conversion of the Preferred Shares then held,
by such Fully-Exercising Investor bears to the total number of shares of Common
Stock issued and outstanding, including shares issuable upon conversion of
convertible securities issued and outstanding then held, by all Fully-Exercising
Investors who wish to purchase some of the unsubscribed shares.
2.4 Sale after Notice. If all such Future Shares referred to in the
Notice are not elected to be obtained as provided in Section 2.3 hereof, the
Company may, during the 90-day period following the expiration of the period
provided in Section 2.3 hereof, offer the remaining unsubscribed Future Shares
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree, than those specified in the Notice. If the Company
does not enter into an agreement for the sale of the Future Shares within such
period, or if such agreement is not consummated within 90 days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Future Shares shall not be offered unless first reoffered to the Investors in
accordance herewith.
2.5 Assignment. The right of first offer granted under this Section
2 is assignable by the Investors to any transferee of a minimum of 500,000
shares of Common Stock (including any shares of Common Stock into which shares
of Preferred Stock are convertible).
2.6 Termination of Rights. No shareholder shall be entitled to
exercise any right provided for in this Section 2: (i) upon the consummation of
the sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the initial firm
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<PAGE> 14
commitment underwritten offering of its securities to the general public or (ii)
when the Company first becomes subject to the periodic reporting requirements of
Section 12(g) or 15(d) of the Securities Exchange Act of 1934, whichever event
shall first occur.
3. Termination of Prior Rights Agreements. The Prior Rights Agreement
is hereby terminated and superseded by this Agreement. This termination shall be
binding and effective on all parties to the Prior Rights Agreement upon the
execution of this Agreement by the holders of the majority of the Registrable
Securities under the Prior Rights Agreement.
4. Waiver of Right of First Offer. To the extent that an Investor under
the Prior Rights Agreement is not purchasing its pro rata share of Series D
Preferred Stock pursuant to the Series D Purchase Agreement, all rights under
the Right of First Offer set forth in Section 2 of the Prior Rights Agreement to
receive notice of the issuance of the Series D Preferred Stock and to purchase
such securities are hereby waived. This waiver shall be binding and effective on
all parties to the Prior Rights Agreement upon the execution of this Agreement
by the holders of the majority of the Registrable Securities under the Prior
Rights Agreement.
5. Miscellaneous Provisions.
5.1 Waivers and Amendments. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least a majority of the shares of Registrable Securities; provided, however,
that any amendment to this Agreement which solely adds as new Investors parties
who purchase Series D Preferred Stock of the Company pursuant to subsequent
closings of the Series D Agreement shall not require any approval by the holders
of Registrable Securities or the Company and may be effected by adding
additional signature pages and additional Exhibit A pages hereto. Any amendment
or waiver effected in accordance with this Section 5.1 shall be binding upon
each person or entity which are granted certain rights under this Agreement and
the Company.
5.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, except as otherwise noted herein,
shall be deemed effectively given upon personal delivery, delivery by nationally
recognized courier or five business days after deposit with the United States
Post Office (by first class mail, postage prepaid), addressed: (a) if to the
Company, at 3100 Central Expressway, Santa Clara, CA 95051 USA (or at such other
address as the Company shall have furnished to the Investors in writing)
attention of President and (b) if to an Investor, at the latest address of such
person shown on the Company's records.
5.3 Descriptive Headings. The descriptive headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
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<PAGE> 15
5.4 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
5.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
5.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
5.7 Successors and Assigns. Except as otherwise expressly provided
in this Agreement, this Agreement shall benefit and bind the successors,
assigns, heirs, executors and administrators of the parties to this Agreement.
5.8 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter of this Agreement. Without in any manner limiting the foregoing, the
parties hereto agree that this Agreement supersedes and replaces the Prior
Rights Agreement, and that the Prior Rights Agreement shall hereafter have no
further force or effect.
5.9 Separability; Severability. Unless expressly provided in this
Agreement, the rights of each Investor under this Agreement are several rights,
not rights jointly held with any other Investors. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Investor
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Investors. If any provision of this Agreement is judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired.
5.10 Stock Splits. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
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<PAGE> 1
EXHIBIT 10.2
SYMYX TECHNOLOGIES
1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant of an Option and subject to the applicable provisions of Section 422 of
the Code and the regulations promulgated thereunder. Stock Purchase Rights may
also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Symyx Technologies, a California corporation.
(g) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any Director of the Company whether
compensated for such services or not. If the Company registers any class of any
equity security pursuant to the Exchange Act, the term Consultant shall
thereafter not include Directors who are not compensated for their services or
are paid only a Director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any Parent or Subsidiary
is not interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. A leave of
<PAGE> 2
absence approved by the Company shall include sick leave, military leave, or any
other personal leave approved by an authorized representative of the Company.
For purposes of Incentive Stock Options, no such leave may exceed 90 days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract, including Company policies. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, on the 91st day of such
leave any Incentive Stock Option held by the Optionee shall cease to be treated
as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.
(i) "Director" means a member of the Board of Directors of the
Company.
(j) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the time of determination and reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the Nasdaq National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(o) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
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<PAGE> 3
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Optioned Stock" means the Common Stock subject to an Option or
a Stock Purchase Right.
(r) "Optionee" means an Employee or Consultant who receives an
Option or Stock Purchase Right.
(s) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(t) "Plan" means this 1996 Stock Plan.
(u) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(v) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(x) "Stock Purchase Right" means a right to purchase Common Stock
pursuant to Section 11 below.
(y) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 1,483,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an option exchange program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, and the original purchaser of such Shares did
not receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.
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<PAGE> 4
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a Committee appointed by the Board.
(b) Plan Procedure After the Date, if any, upon Which the Company
becomes Subject to the Exchange Act.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to Directors,
Officers and Employees who are neither Directors nor Officers.
(ii) Administration With Respect to Directors and Officers. With
respect to grants of Options and Stock Purchase Rights to Employees who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board if the Board may administer the Plan in compliance with the rules under
Rule 16b-3 promulgated under the Exchange Act or any successor thereto ("Rule
16b-3") relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made, or (B) a Committee designated by the Board to
administer the Plan, which Committee shall be constituted to comply with the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made.
(iii) Administration With Respect to Other Employees and
Consultants . With respect to grants of Options and Stock Purchase Rights to
Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated by
the Board, which committee shall be constituted in such a manner as to satisfy
the legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate and securities laws, of the Code, and of
any applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all
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<PAGE> 5
members of the Committee and thereafter directly administer the Plan, all to the
extent permitted by the Applicable Laws.
(c) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom Options and
Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof are granted hereunder;
(iv) to determine the number of Shares to be covered by each
such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions of any award granted
hereunder;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted; and
(ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An
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<PAGE> 6
Employee or Consultant who has been granted an Option or Stock Purchase Right
may, if otherwise eligible, be granted additional Options or Stock Purchase
Rights.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuation of his or her
employment or consulting relationship with the Company, nor shall it interfere
in any way with his or her right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without cause.
(d) Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options and Stock Purchase Rights to purchase more than 75% of the
shares reserved for issuance under the Plan.
(ii) The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 12.
(iii) If an Option or Stock Purchase Right is cancelled in the
same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 12), the cancelled Option or
Stock Purchase Right shall be counted against the limit set forth in subsection
(i) above. For this purpose, if the exercise price of an Option or Stock
Purchase Right is reduced, such reduction will be treated as a cancellation of
the Option or Stock Purchase Right and the grant of a new Option or Stock
Purchase Right.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
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<PAGE> 7
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant.
(B) granted to any other person, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
a broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of
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<PAGE> 8
the sale or loan proceeds required to pay the exercise price, or (6) any
combination of the foregoing methods of payment. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5)
years from the date the Option is granted.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) hereof. Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote, receive dividends or any other rights
as a shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 hereof.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (but not in the event of an Optionee's change of status from Employee
to Consultant (in which case an Employee's Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the date three (3)
months and one day following such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the
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<PAGE> 9
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of his or
her disability, the Optionee may, but only within twelve (12) months from the
date of such termination (and in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent otherwise entitled to exercise it at the date of such termination.
If such disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive
Stock Option shall automatically cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option on
the day three months and one day following such termination. To the extent that
the Optionee was not entitled to exercise the Option at the date of termination,
or if the Optionee does not exercise such Option to the extent so entitled
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant) by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option on the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after the Optionee's death, the
Optionee's estate or a person who acquires the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Rule 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
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<PAGE> 10
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator makes the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but in no case at a rate of less than 20% per year
over five years from the date of purchase.
(c) Other Provisions. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the
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<PAGE> 11
Company. The conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option or Stock Purchase Right shall
terminate immediately prior to the consummation of such proposed action.
(c) Merger. In the event of a merger of the Company with or into
another corporation, each outstanding Option or Stock Purchase Right may be
assumed or an equivalent option or right may be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. If, in such
event, an Option or Stock Purchase Right is not assumed or substituted, the
Option or Stock Purchase Right shall terminate as of the date of the closing of
the merger. For the purposes of this paragraph, the Option or Stock Purchase
Right shall be considered assumed if, following the merger, the Option or Stock
Purchase Right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger, the consideration (whether stock, cash, or other securities or
property) received in the merger by holders of Common Stock for each Share held
on the effective date of the transaction (and if the holders are offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares). If such consideration received in the
merger is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger.
13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
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<PAGE> 12
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted, and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
16. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
17. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Administrator shall approve from time to
time.
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<PAGE> 13
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
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<PAGE> 14
SYMYX TECHNOLOGIES
1996 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF GRANT
FIELD(1)
- ------------------------------
Address
- ------------------------------
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
<TABLE>
<S> <C>
Date of Grant FIELD(2)
----------------------
Vesting Commencement Date FIELD(3)
----------------------
Exercise Price per Share
----------------------
Total Number of Shares Granted FIELD(4)
----------------------
Total Exercise Price
----------------------
Type of Option: [ ] Incentive Stock Option
[ ] Nonstatutory Stock Option
Term/Expiration Date: Ten Years
Vesting Schedule:
</TABLE>
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
<PAGE> 15
Termination Period:
This Option may be exercised for thirty (30) days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. Symyx Technologies, a California corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase up to a total number of shares
of Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1996 Stock Plan (the "Plan")
adopted by the Company, which is incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option.
If designated in the Notice of Grant as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option.
2. Exercise of Option. This Option shall be exercisable during its term
in accordance with the Exercise Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of a
share.
(b) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(i)(c).
(c) In no event may this Option be exercised after the
date of expiration of the term of this Option as set forth in the Notice of
Grant.
(ii)Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The
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<PAGE> 16
written notice shall be accompanied by payment of the Exercise Price. This
Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
4. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check;
(iii) surrender of other shares of Common Stock of the Company
which (A) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by the Optionee for more than six (6) months on the date
of surrender, and (B) have a fair market value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
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<PAGE> 17
6. Termination of Relationship. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not entitled to exercise this Option at
the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within six (6) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the day three (3)
months and one (1) day following such termination. To the extent that Optionee
was not entitled to exercise the Option at the date of termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
8. Death of Optionee. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a nonstatutory Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the exercise price. However, the timing of this income recognition
may be deferred for up to six (6) months if Optionee is subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation, or collect from
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<PAGE> 18
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income. Additionally, the Optionee may at some
point be required to satisfy tax withholding obligations with respect to the
disqualifying disposition of an Incentive Stock Option. The Optionee shall
satisfy his or her tax withholding obligation arising upon the exercise of this
Option out of Optionee's compensation or by payment to the Company.
12. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(i) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or California income tax
liability upon the exercise of the Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to the alternative minimum tax in the year
of exercise.
(ii) Exercise of ISO following Disability. If the Optionee's
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within ninety (90) days of such termination for
the ISO to be qualified as an ISO.
(iii) Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability and California income tax liability upon
the exercise of a Nonstatutory Stock Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. If Optionee is an employee, the Company will
be required to withhold from Optionee's compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
(iv) Disposition of Shares. In the case of an NSO, if Shares are
held for at least one (1) year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal and California income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for at least one (1) year after exercise and are disposed of at least
two (2) years after the Date of Grant, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
such one (1) year period or within two (2) years after the Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of (1) the fair market value of the Shares on the
date of exercise, or (2) the sale price of the Shares.
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<PAGE> 19
(v) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two (2) years after the Date of Grant, or (2) the date one
(1) year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
SYMYX TECHNOLOGIES
By:_________________________________
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<PAGE> 20
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Dated: _______________ ______________________________
(Optionee)
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<PAGE> 21
EXHIBIT A
1996 STOCK PLAN
EXERCISE NOTICE
Symyx Technologies
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today, ___________, 19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Symyx Technologies (the
"Company") under and pursuant to the Company's 1996 Stock Plan, as amended (the
"Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated
_____________ (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
4. Company's Right of First Refusal. Before any Shares held by Optionee
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
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<PAGE> 22
(a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within one hundred twenty (120) days after the date of the Notice
and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply to
the Shares in the hands of such Proposed Transferee. If the Shares described in
the Notice are not transferred to the Proposed Transferee within such period, a
new Notice shall be given to the Company, and the Company and/or its assignees
shall again be offered the Right of First Refusal before any Shares held by the
Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
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<PAGE> 23
(g) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares ninety (90) days after the first sale
of Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the 1933 Act.
5. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by state or federal
securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER
OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
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<PAGE> 24
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit B, the Investment
Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
7. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. Delivery of Payment. Optionee herewith delivers to the Company the
full Exercise Price for the Shares.
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<PAGE> 25
13. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and is governed by California law except for that body of law pertaining
to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: Symyx Technologies
___________________________ By:____________________________
(Signature)
Its:___________________________
Address: Address:
___________________________ _______________________________
___________________________ _______________________________
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<PAGE> 26
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : SYMYX TECHNOLOGIES
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities. Optionee
is acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one (1) year or any other
fixed period in the future. Optionee further understands that the Securities
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Optionee
further acknowledges and understands that the Company is under no obligation to
register the securities. Optionee understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company, a legend prohibiting
their transfer without the consent of the Commissioner of Corporations of the
State of California and any other legend required under applicable state
securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted
<PAGE> 27
securities" acquired, directly or indirectly from the issuer thereof, in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of the grant of
the Option to the Optionee, the exercise will be exempt from registration under
the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of securities being sold during any three (3) month
period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two (2) years after the party has purchased, and
made full payment for, within the meaning of Rule 144, the securities to be
sold; and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than three (3) years, the satisfaction of the conditions set
forth in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee hereby agrees that if so requested by the Company
or any representative of the underwriters in connection with any registration of
the offering of any securities of the Company under the 1933 Act, Optionee shall
not sell or otherwise transfer any Shares or other securities of the Company
during the one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the 1933 Act; provided,
however, that such restriction shall only apply to the first registration
statement of the Company to become effective under the 1933 Act which include
securities to be sold on behalf of the Company to the public in an underwritten
public offering under the 1933 Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such one hundred eighty (180) day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
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<PAGE> 28
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
____________________________
Date:________________, 19___
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<PAGE> 29
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (a) The issuer of any security upon which a
restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of these rules;
(4) to the transferror's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferrer or the transferror's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same issuer; (6)
by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting
as such or as a finder) to a resident of a foreign state, territory or country
who is neither domiciled in this state to the knowledge of the broker-dealer,
nor actually present in this state if the sale of such securities is not in
violation of any securities law of the foreign state, territory or country
concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other lien given
by the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112, 25113 or
25121 of the Code, of the securities to be transferred, provided that no order
under Section 25140 or subdivision (a) of Section 25143 is in effect with
respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation,
or by a wholly owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113
of the Code, provided that no order under Section 25140 or subdivision (a) of
Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who
are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or
to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or
by the administrator of the unclaimed property law of another state if, in
either such case, such person (i) discloses to potential purchasers at the sale
that transfer of the securities is restricted under this rule, (ii) delivers to
each purchaser a copy of this rule, and (iii) advises the Commissioner of the
name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirement of Section 25110 of
the Code but exempt from that qualification requirement by subdivision (f) of
Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE
<PAGE> 30
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
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<PAGE> 1
EXHIBIT 10.3
SYMYX TECHNOLOGIES, INC.
1997 STOCK PLAN
(AS AMENDED AND RESTATED SEPTEMBER 17, 1999)
1. Purposes of the Plan. The purposes of this 1997 Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Symyx Technologies, Inc., a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
<PAGE> 2
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the 181st day of such leave any Incentive
Stock Option held by the Optionee shall cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option. Neither service as a Director nor payment of a director's fee by the
Company shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "IPO Effective Date" means the date upon which the Securities
and Exchange Commission declares the initial public offering of the Company's
common stock as effective.
(p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
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<PAGE> 3
(q) "Notice of Grant" means a written or electronic notice
evidencing certain times and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(u) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(w) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(x) "Outside Director" means a Director who is not an Employee.
(y) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this 1997 Stock Plan, as amended and restated.
(aa) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(bb) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(dd) "Section 16(b) " means Section 16(b) of the Exchange Act.
(ee) "Service Provider" means an Employee, Director or Consultant.
(ff) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
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<PAGE> 4
(gg) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(hh) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is [6,500,000] Shares, plus (a) any Shares which were
reserved but unissued under the Company's 1996 Stock Plan ("1996 Plan") as of
the date of stockholder approval of the original adoption of this Plan, (b) any
Shares subsequently returned to the 1996 Plan as a result of termination of
options or repurchase of Shares issued under the 1996 Plan, and (c) an annual
increase to be added on the first day of the Company's fiscal year beginning in
fiscal year [2000] equal to the lesser of (i) _______ shares, (ii) __% of the
outstanding shares on such date, or (iii) an amount determined by the Board. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Stock Purchase Right, shall not
be returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Service Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
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<PAGE> 5
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 16(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an Optionee
to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable;
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<PAGE> 6
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 100,000 Shares,
which shall not count against the limit, set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 14), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
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<PAGE> 7
7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 16 of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
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<PAGE> 8
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.
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<PAGE> 9
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. Subject to
Section 14, if an Optionee ceases to be a Service Provider (but not in the event
of an Optionee's change of status from Employee to Consultant (in which case an
Employee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status) or
from Consultant to Employee), such Optionee may, but only within such period of
time as is specified in the Option Agreement (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for three (3)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may, but only
within twelve (12) months from the date of such termination (and in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option the extent the Option is vested on
the date of termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent that the Option is vested on the date of
death. If, at the time of death, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
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<PAGE> 10
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Formula Option Grants to Outside Directors. Outside Directors shall
be automatically granted Options each year in accordance with the following
provisions:
(a) All Options granted pursuant to this Section shall be
Nonstatutory Stock Options and, except as otherwise provided herein, shall be
subject to the other terms and conditions of the Plan.
(b) Each Outside Director shall be automatically granted an Option
to purchase ________ Shares following each annual meeting of the stockholders of
the Company, except in the case of the first such annual meeting after the IPO
Effective Date if such annual meeting is held
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<PAGE> 11
within six (6) months of the IPO Effective Date, if as of such date, he or she
shall continue to serve on the Board and shall have served on the Board for at
least the preceding six (6) months.
(c) Any exercise of an Option granted before the Company has
obtained stockholder approval of the Plan in accordance with Section 20 hereof
shall be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 20 hereof.
(d) The terms of each Option granted pursuant to this Section shall
be as follows:
(i) the term of the Option shall be ten (10) years.
(ii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.
(iii) Each Option shall vest as to 1/12 of the Optioned Stock
each month following the date of grant, such that the Option shall be fully
vested and exercisable one year from the date of grant of the Option.
14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, the number of shares of Common
Stock covered by First Options and Subsequent Options to be granted under the
Plan, the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase Rights have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Purchase Right and the number of shares of
Common Stock which may be added to the Plan each fiscal year (pursuant to
Section 3), as well as the price per share of Common Stock covered by each such
outstanding Option or Stock Purchase Right, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee at least 15 days prior to such proposed action. To the extent it has
not been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding
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<PAGE> 12
Option and Stock Purchase Right shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or Stock Purchase Right, the Optionee shall
fully vest in and have the right to exercise the Option or Stock Purchase Right
as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
15. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
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<PAGE> 13
17. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
18. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
19. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
20. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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<PAGE> 14
SYMYX TECHNOLOGIES
1997 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ____________________________________
Date of Grant ____________________________________
Vesting Commencement Date ____________________________________
Exercise Price per Share $___________________________________
Total Number of Shares Granted ____________________________________
Total Exercise Price $___________________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ____________________________________
Vesting Schedule:
Subject to accelerated vesting as set forth in the Plan, this Option may
be exercised, in whole or in part, in accordance with the following schedule:
[25% OF THE SHARES SUBJECT TO THE OPTION SHALL VEST TWELVE MONTHS AFTER
THE VESTING COMMENCEMENT DATE, AND 1/48 OF THE SHARES SUBJECT TO THE OPTION
SHALL VEST EACH MONTH THEREAFTER, SUBJECT TO THE OPTIONEE CONTINUING TO BE A
SERVICE PROVIDER ON SUCH DATES].
<PAGE> 15
Termination Period:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for twelve (12) months after Optionee ceases to be a
Service Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
A. Grant of Option.
The Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 16(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of
this Option unless such issuance and exercise complies with Applicable Laws.
Assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
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<PAGE> 16
C. Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
4. surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
D. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by the Optionee. The terms of the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
E. Term of Option.
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.
F. Tax Consequences.
Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
1. Exercising the Option.
(a) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an
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<PAGE> 17
amount in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if
such withholding amounts are not delivered at the time of exercise.
(b) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
2. Disposition of Shares.
(a) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(b) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares.
If the Optionee sells or otherwise disposes of any of the Shares acquired
pursuant to an ISO on or before the later of (i) two years after the grant date,
or (ii) one year after the exercise date, the Optionee shall immediately notify
the Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash
or out of the current earnings paid to the Optionee.
G. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
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<PAGE> 18
H. NO GUARANTEE OF CONTINUED SERVICE.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A
SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's
representative below, you and the Company agree that this Option is granted
under and governed by the terms and conditions of the Plan and this Option
Agreement. Optionee has reviewed the Plan and this Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and fully understands all provisions of the Plan
and Option Agreement. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Option Agreement. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.
OPTIONEE: SYMYX TECHNOLOGIES
__________________________________ ____________________________________
Signature By
__________________________________ ____________________________________
Print Name Title
__________________________________
Residence Address
__________________________________
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<PAGE> 19
EXHIBIT A
SYMYX TECHNOLOGIES
1997 STOCK PLAN
EXERCISE NOTICE
Symyx Technologies
3100 Central Expressway
Santa Clara, CA 95051
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________, _____,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Symyx Technologies (the "Company") under
and pursuant to the Symyx Technologies 1997 Stock Plan (the "Plan") and the
Stock Option Agreement dated, _____ (the "Option Agreement"). The purchase price
for the Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 14 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 20
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER SYMYX TECHNOLOGIES
__________________________________ ____________________________________
Signature By
__________________________________ ____________________________________
Print Name Its
Address: Address:
__________________________________ Symyx Technologies
3100 Central Expressway
__________________________________ Santa Clara, CA 95051
____________________________________
Date Received
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<PAGE> 1
EXHIBIT 10.4
SYMYX TECHNOLOGIES
1999 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1999 Employee Stock
Purchase Plan of Symyx Technologies.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company or any
committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the common stock of the Company.
(d) "Company" shall mean Symyx Technologies, a California
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross earnings
and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary that has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
Offering Period.
(i) "Exercise Date" shall mean the last Trading Day of each Purchase
Period.
<PAGE> 2
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock prior
to the date of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or
(iv) For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").
(k) "Offering Periods" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after [_____________]
and [______________] of each year and terminating on the last Trading Day in the
periods ending twenty-four months later; provided, however, that the first
Offering Period under the Plan shall commence with the first Trading Day on or
after the date on which the Securities and Exchange Commission declares the
Company's Registration Statement effective and ending on the last Trading Day on
or before [______________]. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 1999 Employee Stock Purchase Plan.
(m) "Purchase Period" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
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<PAGE> 3
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after [_______________] and [_______________] each year, or on
such other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 20 hereof; provided, however, that the
first Offering Period under the Plan shall commence with the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and ending on the last Trading
Day on or before [________________]. The Board shall have the power to change
the duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without shareholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
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<PAGE> 4
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding [_______________ (__%)] of
the Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
[___________] shares of the Company's Common Stock (subject to any adjustment
pursuant to Section 19), and provided further that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof. The Board
may, for future Offering Periods, increase or decrease, in its absolute
discretion, the maximum number of shares of
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<PAGE> 5
the Company's Common Stock an Employee may purchase during each Purchase Period
of such Offering Period. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10
hereof. The option shall expire on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
shareholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
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<PAGE> 6
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any reason, he or
she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant's account during the Offering Period but
not yet used to exercise the option shall be returned to such participant or, in
the case of his or her death, to the person or persons entitled thereto under
Section 15 hereof, and such participant's option shall be automatically
terminated. The preceding sentence notwithstanding, a participant who receives
payment in lieu of notice of termination of employment shall be treated as
continuing to be an Employee for the participant's customary number of hours per
week of employment during the period in which the participant is subject to such
payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be [_____________ (__________)] shares plus an annual increase to be added
on the first day of the Company's fiscal year beginning in [YEAR], equal to the
lesser of (i) [______] shares, (ii) [___%] of the outstanding shares on such
date or (iii) a lesser amount determined by the Board.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
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<PAGE> 7
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
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<PAGE> 8
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its shareholders. Except as provided
in Section 19 and this Section 20 hereof, no amendment may make any change in
any option
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<PAGE> 9
theretofore granted which adversely affects the rights of any participant. To
the extent necessary to comply with Section 423 of the Code (or any successor
rule or provision or any other applicable law, regulation or stock exchange
rule), the Company shall obtain shareholder approval in such a manner and to
such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time
of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder approval
or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
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<PAGE> 10
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
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<PAGE> 11
EXHIBIT A
SYMYX TECHNOLOGIES
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the Symyx
Technologies Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common Stock
in accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to _____%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at
the time such shares were purchased by me over the price which I paid
for the shares. I hereby agree to notify the Company in writing within
30 days after the date of any disposition of my shares and I will make
adequate provision for Federal, state or other tax withholding
obligations, if any, which arise upon the
<PAGE> 12
disposition of the Common Stock. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to
meet any applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the
2-year and 1-year holding periods, I understand that I will be treated
for federal income tax purposes as having received income only at the
time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(1) the excess of the fair market value of the shares at the time of
such disposition over the purchase price which I paid for the shares,
or (2) 15% of the fair market value of the shares on the first day of
the Offering Period. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)__________________________________________________
(First) (Middle) (Last)
_________________________ __________________________________
Relationship
__________________________________
(Address)
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<PAGE> 13
Employee's Social
Security Number:
__________________________________
Employee's Address: __________________________________
__________________________________
__________________________________
__________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ __________________________________
Signature of Employee
__________________________________
Spouse's Signature
(If beneficiary other than spouse)
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<PAGE> 14
EXHIBIT B
SYMYX TECHNOLOGIES
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Symyx
Technologies Employee Stock Purchase Plan which began on ____________, ______
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
__________________________________
__________________________________
__________________________________
Signature:
__________________________________
Date:_____________________________
<PAGE> 1
EXHIBIT 10.5
SYMYX TECHNOLOGIES, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
__________, 1999 by and between Symyx Technologies, Inc., a Delaware corporation
(the "Company"), and ____________________ ("Indemnitee").
WHEREAS, effective as of the date hereof, Symyx Technologies, a
California corporation, is reincorporating into Delaware;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of
such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in connection with the Company's reincorporation, the Company
and Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement to provide indemnification and
advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) or group acting in concert, other than a trustee or other
<PAGE> 2
fiduciary holding securities under an employee benefit plan of the Company
acting in such capacity or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation
other than a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company's assets.
(b) "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
(c) References to the "Company" shall include, in addition to
Symyx Technologies, Inc., any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger to which Symyx
Technologies, Inc. (or any of its wholly owned subsidiaries) is a party which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees, agents or fiduciaries, so that if
Indemnitee is or was a director, officer, employee, agent or fiduciary of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.
(d) "Covered Event" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
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<PAGE> 3
(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) of any Claim and any
federal, state, local or foreign taxes imposed on the Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee
pursuant to Section 3 of Expenses in advance of the settlement of or final
judgement in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.
(g) "Independent Legal Counsel" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the Company
that vote generally in the election of directors.
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<PAGE> 4
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part out of a Covered Event), including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there
has not been a Change in Control, any Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by
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<PAGE> 5
the Company (which approval shall not be unreasonably withheld). Such counsel,
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be entitled to be
indemnified hereunder under applicable law and the Company agrees to abide by
such opinion. The Company agrees to pay the reasonable fees of the Independent
Legal Counsel referred to above and to indemnify fully such counsel against any
and all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to pay Expenses of more than one Independent Legal Counsel in
connection with all matters concerning a single Indemnitee, and such Independent
Legal Counsel shall be the Independent Legal Counsel for any or all other
Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. Upon receipt of a
written undertaking by or on behalf of the Indemnitee to repay such amounts if
it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified therefore by the Company hereunder under applicable law, the Company
shall make Expense Advances to Indemnitee.
(b) Form of Undertaking. Any obligation to repay any Expense
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand
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<PAGE> 6
by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; provided that, (i)
Indemnitee
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<PAGE> 7
shall have the right to employ Indemnitee's separate counsel in any such Claim
at Indemnitee's expense and (ii) if (A) the employment of separate counsel by
Indemnitee has been previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not continue to retain such counsel to defend such Claim, then the fees
and expenses of Indemnitee's separate counsel shall be Expenses for which
Indemnitee may receive indemnification or Expense Advances hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee
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<PAGE> 8
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify or make Expense
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or make Expense
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or crossclaim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's Certificate of Incorporation or Bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, Expense Advances, or insurance recovery, as
the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
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<PAGE> 9
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until such final judicial determination is made, Indemnitee shall be entitled
under Section 3 to receive payment of Expense Advances hereunder with respect to
such action.
14. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party
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<PAGE> 10
addressed, on the date of such delivery, or (ii) if mailed by domestic certified
or registered mail with postage prepaid, on the third business day after the
date postmarked. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
17. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
SYMYX TECHNOLOGIES, INC.
By: _________________________
Print Name: _________________________
Title: _________________________
Address: 3100 Central Expressway
Santa Clara, CA 95051
AGREED TO AND ACCEPTED
INDEMNITEE:
_________________________
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<PAGE> 1
EXHIBIT 10.6
SYMYX TECHNOLOGIES
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into by and between __________________ (the "Executive") and Symyx Technologies,
a California corporation (together with the successor entity resulting from the
reincorporation Symyx Technologies in Delaware, the "Company"), effective as of
December 31, 1998.
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Executive and can cause the Executive
to consider alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication and objectivity of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company
and its shareholders to provide the Executive with an incentive to continue his
employment and to motivate the Executive to maximize the value of the Company
upon a Change of Control for the benefit of its shareholders.
C. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that
all obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment. The Company and the Executive acknowledge that
the Executive's employment is and shall continue to be at-will, as defined under
applicable law. If the Executive's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established Executive plans and
practices or pursuant to other agreements with the Company.
<PAGE> 2
3. Benefits.
(a) Termination Following A Change of Control. In the event that a
Change of Control (as defined below) of the Company occurs and during the period
beginning on the closing date of the transaction giving rise to such Change of
Control and ending 18 months after such closing date, the Executive's employment
with the Company (or the successor entity in such Change of Control transaction)
is either (a) terminated by the Company (or its successor entity) or (b) is
Constructively Terminated (as defined below) by the Executive, then all unvested
Stock Rights (as defined below) shall become fully vested as of the date of such
termination of employment by the Company or Constructive Termination by the
Executive, as the case may be.
(b) Termination For Cause. If the Executive's employment terminates
by reason of the Executive's voluntary resignation (and is not a Constructive
Termination), or if the Executive is terminated for Cause, then the Executive
shall not be entitled to receive the accelerated vesting of Stock Rights set
forth in Section 3(a) above.
4. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean either (i) any act of personal
dishonesty taken by the Executive in connection with his responsibilities as an
Executive and intended to result in substantial personal enrichment of the
Executive, (ii) the conviction of a felony, (iii) a willful act by the Executive
which constitutes gross misconduct and which is injurious to the Company, or
(iv) following delivery to the Executive of a written demand for performance
from the Company which describes the basis for the Company's belief that the
Executive has not substantially performed his duties, continued violations by
the Executive of the Executive's obligations to the Company which are
demonstrably willful and deliberate on the Executive's part.
(b) Change of Control. "Change of Control" means the completion by
the Company of a reorganization, merger, consolidation, in each case with
respect to which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation would not immediately
thereafter own more than 50% of, respectively, the capital stock and the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated corporation's then-outstanding voting
securities, or of a liquidation or dissolution of the Company or of the sale of
all or substantially all of the assets of the Company. For purposes hereof, such
Change of Control shall be deemed to have occurred on the date on which the
transaction closes. Notwithstanding the foregoing, the reincorporation of the
Company in Delaware shall not constitute a Change of Control for purposes of
this Agreement.
(c) Constructive Termination. "Constructive Termination" shall mean
the resignation by the Executive from employment following (i) without the
Executive's express written consent, the assignment to the Executive of any
duties or the reduction of the Executive's duties, either of which results in a
significant diminution in the Executive's position or responsibilities in effect
immediately prior to such assignment, or the removal of the Executive from such
position and
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<PAGE> 3
responsibilities, provided, however that changes in the circumstances of
employment which are solely the result of changes in corporate legal structure
resulting directly from the Change of Control shall not constitute a basis for
Constructive Termination; (ii) without the Executive's express written consent,
a substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Executive
immediately prior to such reduction; (iii) a material reduction by the Company
in the cash compensation of the Executive as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or level of
employee benefits to which the Executive is entitled immediately prior to such
reduction with the result that the Executive's overall benefits package is
significantly reduced; or (v) the relocation of Executive's principal place of
employment to a facility or a location more than 50 miles from the Executive's
then present location, with the Executive's express written consent.
(d) Stock Rights. "Stock Rights" shall mean all options or rights to
acquire vested ownership of shares of Common Stock of the Company under plans,
agreements or arrangements which are compensatory in nature, including, without
limitation, the Company's 1996 and 1997 Stock Option Plans and Restricted Stock
Purchase Agreements between the Company and the Executive.
5. Successors.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
5(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement and all
rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
6. Notice.
(a) General. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to the Executive at his or her home address
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.
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<PAGE> 4
(b) Notice of Termination. Any termination by the Company for Cause
or by the Executive as a result of a voluntary resignation or a Constructive
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 6(a) of this Agreement. Such notice
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated, and shall
specify the termination date (which shall be not more than 30 days after the
giving of such notice). The failure by the Executive to include in the notice
any fact or circumstance which contributes to a showing of Constructive
Termination shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing Executive's
rights hereunder.
7. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Executive may receive from any
other source.
(b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the Company
(other than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
regarding same.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(e) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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<PAGE> 5
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
set forth below.
COMPANY SYMYX TECHNOLOGIES
By:
__________________________________
Title:
_______________________________
Date:
________________________________
Executive __________________________________
[SIGNATURE PAGE TO CHANGE OF CONTROL AGREEMENT]
<PAGE> 1
EXHIBIT 10.7
[LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
(DO NOT USE THIS FORM FOR MULTI-TENANT PROPERTY)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes
only, November 15, 19__, is made by and between Patrick and Bette Ng,
Co-Trustees for the Ng Living Trust, dated December 21, 1987 ("LESSOR") and
Symyx Technologies, Inc., a California corporation ("LESSEE"), (collectively the
"PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 3100 Central Expressway, Santa Clara, located in
the County of Santa Clara, State of California and generally described as
(describe briefly the nature of the property) approximately 32,794 square feet
of research and development, manufacturing, laboratory use, storage and other
related uses ("PREMISES"). (See Paragraph 2 for further provisions.)
1.3 TERM: Eleven years and zero months ("ORIGINAL TERM") commencing
on or before February 1, 1997 ("COMMENCEMENT DATE") and ending January 31, 2008
("EXPIRATION DATE"). (See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: Upon execution of this Lease ("EARLY
POSSESSION DATE"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 BASE RENT: $21,316.00 per month ("BASE RENT"), payable on the
first day of each month commencing February 1, 1997. (See Paragraph 4 for
further provisions.)
[ ] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $21,316.00 as Base Rent for the
period of first month.
1.7 SECURITY DEPOSIT: $37,000.00 ("SECURITY DEPOSIT"). (See
Paragraph 5 for further provisions.)
1.8 PERMITTED USE: Research and development, manufacturing,
laboratory use, storage and other related uses (See Paragraph 6 for further
provisions.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes): Tenny
Tsai of BT Commercial represents
[X] Lessor exclusively ("LESSOR'S BROKER"): [ ] both Lessor and Lessee, and
Mark Pearson of Catalyst Real Estate Group and Randy Scott of Cornish &
Carey represents
[ ] Lessee exclusively ("LESSEE'S BROKER"): [ ] both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by None ("GUARANTOR"). (See Paragraph 37 for further provisions.)
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 61 and an Environmental Addendum consisting of Paragraphs
1-12 and Exhibits A-D, all of which constitute a part of this Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less. See Addendum
Paragraph 52.
2.3 See Addendum Paragraph 52
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.
2.5 LESSEE PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3. Lessor agrees that Lessee shall
be given access to and possession of the Premises for the purpose of
constructing Lessee Improvements (as defined herein) within seven (7) days of
the execution of this Lease ("Construction Commencement Date"). Notwithstanding
anything to the contrary in the Lease, during the period from the Construction
Commencement Date to the Commencement Date, any entry by Lessee onto the
Premises shall be subject to all of the terms and conditions of this Lease;
provided, however, that during such time period, Lessee shall have no obligation
to pay monthly rent, to reimburse Lessor for any real property taxes or
insurance applicable to such time period, or to pay for any utility expenses
other than those incurred by Lessee or its agents and contractors.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease, however, (including but not limited to the obligations to pay Real
Property Taxes and insurance premiums and to maintain the Premises) shall be in
effect during such period. Any such early possession shall not affect nor
advance the Expiration Date of the Original Term.
NET
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<PAGE> 2
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however, that if
such written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when the
term actually commences, if possession is not rendered to Lessee when required
by this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or omissions of
Lessee.
4. RENT.
4.1. BASE RENT. Lessee shall cause payment of Base Rent and other
rent or charges, as the same may be adjusted from time to time, to be received
by Lessor in lawful money of the United States, without offset or deduction, on
or before the day on which it is due under the terms of this Lease. Base Rent
and all other rent and charges for any period during the term hereof which is
for less than one (1) full calendar month shall be prorated based upon the
actual number of days of the calendar month involved. Payment of Base Rent and
other charges shall be made to Lessor at the address stated herein or to such
other persons or at such other addresses as Lessor may from time to time
designate in writing to Lessee.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including reasonable attorneys' fees) which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of said
security Deposit, Lessee shall within ten (10) days after written request
therefore deposit moneys with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. Lessor shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Lessor shall no later than thirty days after the later of (1) the expiration or
earlier termination of the Lease, (2) the date upon which Lessee has vacated the
Premises, or (3) the date by which Lessee has provided Lessor with a closure
letter from the City of Santa Clara, return to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest herein), that portion of the
security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any moneys to be paid by Lessee under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of the
Premises in a manner that creates waste or a nuisance, or that disturbs owners
and/or occupants of, or causes damage to, neighboring premises or properties.
Lessor hereby agrees to not unreasonably withhold or delay its consent to any
written request by Lessee, Lessee's assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not impair the structural integrity of the
improvements on the Premises, the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises and the improvements thereon,
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to
withhold such consent, Lessor shall within five (5) business days give a written
notification of same, which notice shall include an explanation of Lessor's
reasonable objections to the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release, or
effect, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored
by any governmental authority, or (iii) a basis for liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in, on or about the Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
Substances without the express prior written consent of Lessor and compliance in
a timely manner (at Lessee's sole cost and expense) with all Applicable Law (as
defined in Paragraph 6.3). Lessor acknowledges that Lessee will be using a
number of Hazardous Substances relating to Lessee's Permitted Use of the
Premises and Lessor hereby consents to Lessee's use of such Hazardous
Substances, provided that: (1) Lessee's use of Hazardous Substances complies
with all Applicable Laws, and (2) Lessee provides Lessor a copy of any Hazardous
Materials Management Plan submitted by Lessee to any local agency. Lessor and
Lessee acknowledge that there is existing groundwater contamination on the
Premises as evidenced by the documents listed in Exhibit C attached hereto which
reports have been reviewed by Lessee. A copy of Lessee's current Hazardous
Materials Management Plan is attached as Exhibit D hereto.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor, Lessee shall also immediately give Lessor
a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action or proceeding given to, or received from,
any governmental authority or private party, or persons entering or occupying
the Premises, concerning the presence, spill, release, discharge of, or exposure
to, any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in
this Lease and any addendum hereto, Lessee shall, at Lessee's sole cost and
expense, fully, diligently and in a timely manner, comply with all "APPLICABLE
LAW", which term is used in this Lease to include all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or rating
bureau, and the recommendations of Lessor's engineers and/or consultants,
relating in any manner to the Premises (including but not limited to matters
pertaining to (i) industrial hygiene, (ii) environmental conditions on, in,
under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any Hazardous Substance or
storage tank), now in effect or which may hereafter come into effect, and
whether or not reflecting a change in policy from any previously existing
policy. Lessee shall, within five (5) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including,
but not limited to, permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Law specified
by Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving failure by
Lessee or the Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as
defined in Paragraph 8.3(a)) shall have the right to enter one Premises at any
time, in the case of an emergency, and otherwise at reasonable times, for the
purpose of inspecting the condition of the Premises and for verifying compliance
by Lessee with this Lease and all Applicable Laws (as defined in Paragraph 6.3),
and to employ experts and/or consultants in connection therewith and/or to
advise Lessor with respect to Lessee's activities, including but not limited to
the installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Material Default or Material Breach of this Lease, Material violation
of Applicable Law, or a contamination, caused or materially contributed to by
Lessee is found to exist or be imminent, or unless the inspection is requested
or ordered by a governmental authority as the result of any such existing or
imminent violation or contamination. In any such case, Lessee shall upon request
reimburse Lessor or Lessor's Lender, as the case may be, for the costs and
expenses of such inspections.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc),
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7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair, structural and non-structural (whether or not such portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such repairs
occurs as a result of Lessee's use, any prior use, the elements or the age of
such portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing system, including fire alarm and/or
smoke detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. If Lessee occupies the Premises for seven (7) years or
more, Lessor may require Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than once every seven
(7) years. Notwithstanding anything to the contrary in the Lease, Lessee's
maintenance, repair and/or replacement obligations regarding the Lessee
Improvements and the Lessee Owned Alterations and Utility Installations (as
defined herein) shall not extend to, and Lessee shall not be required to perform
or pay for repairs or replacements resulting from, ordinary wear and tear to
such Lessee Improvements Lessee Owned Alterations and Utility Installations.
(b) Lessee shall, at Lessee's sole cost and expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in, the
inspection, maintenance and service of the following equipment and improvements,
if any, located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and agreements
of Lessor contained in Paragraphs 2.2 (relating to condition of the Premises),
2.3 (relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms
of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of any needed repairs.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, heating,
ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises. The
term "ALTERATIONS" shall mean any modification of the improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion, "LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by lessee that are not yet owned
by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof), as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as amended does not exceed $25,000. Notwithstanding the
foregoing, or anything to the contrary in the Lease: (1) Lessee shall not be
required to obtain Lessor's consent to any non-structural Lessee Owned
Alterations and Utility Installation which costs less than $25,000 per work of
improvement; and (2) If Lessor's consent is required for any Lessee Owned
Alteration and Utility Installations and Lessor does not notify Lessee in
writing of its approval or disapproval within fifteen (15) days following
Lessee's request for approval, then Lessor shall be deemed to have approved the
proposed Lessee Owned Alteration and Utility Installations in question. Lessee
agrees to provide Lessor with an update of the plans for the Premises every six
months during the Lease Term (unless during such six month period, there has
been no Lessee Owned Alterations and Utility Installations to the Premises).
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities, (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and in compliance with all Applicable Law.
Lessee shall promptly upon completion thereof furnish Lessor with as-built plans
and specifications therefor. Lessor may (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation that
costs $10,000 or more upon Lessee's providing Lessor with a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. If Lessor shall require, Lessee
shall furnish a surety bond satisfactory to Lessor in an amount equal to one and
one-half times the amount of such contested lien claim or demand, indemnifying
Lessor against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's reasonable attorney's fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal
or become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises. Unless
otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date, with
all of the improvements, parts and surfaces thereof clean and free of debris and
in good operating order, condition and state of repair, ordinary wear and tear
excepted. "ORDINARY WEAR AND TEAR" shall not include any damage or deterioration
that would have been prevented by good maintenance practice or to Lessee
performing all of its obligations under this Lease. Except as otherwise agreed
or specified in writing by Lessor, the Premises, as surrendered, shall include
the Utility Installations. The obligation of Lessee shall include the repair of
any damage occasioned by the installation, maintenance or removal of Lessee's
Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee. Lessee's Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee subject to its obligation to repair and restore the Premises
per this Lease. Notwithstanding anything to the contrary in the Lease, (1) All
Lessee Owned Alterations and Utility Installations, Trade Fixtures, Lessee
Improvements, and personal property installed in the Premises at Lessee's
expense ("Lessee's Property") shall at all times remain Lessee's property; (2)
other than as expressly provided to the contrary in Sections 9.4, 14, and 53,
Lessee shall be entitled to all insurance and condemnation proceeds from
Lessee's Property; (3) Lessee shall be entitled to all depreciation,
amortization and other tax benefits with respect to such Lessee's; (4) Lessee
shall not be required to remove any Lessee Improvements at the expiration or
earlier termination of the Lease; (5) Lessee may remove at any time, (i) the
Exhibit B Improvements as defined herein and (ii) any Lessee Owned Alterations
and Utility Installations (other than the Lessee Improvements which are not
Exhibit B Improvements) which can be removed without structural injury to the
Premises, provided Lessee repairs all damage caused by such removal; and (6)
upon Lessee's request, Lessor shall advise Lessee in writing, within fifteen
(15) days of the receipt of such request, as to whether Lessor reserves the
right to require Lessee to remove any Lessee Owned Alterations and Utility
Installations (excluding Lessee Improvements) from the Premises upon expiration
or earlier termination of the Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or
Lessee is the Insuring Party, Lessee shall pay for all insurance required under
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 per occurrence. Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice for any amount due.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability Policy of Insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "Additional Insured -- Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) CARRIED BY LESSOR. In the event Lessor is the Insuring
Party, Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
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8.3 PROPERTY INSURANCE -- BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and to the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lender(s)"), insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason ??? unique
nature or age of the improvements involved, such latter amount is less than full
replacement cost. The insurance required to be obtained by Lessor pursuant to
this paragraph shall cover the building including the Lessee Improvements that
are not Exhibit B Improvements ("Replacement Cost Insurance"). On or before the
first business day after each anniversary after the Commencement Date, Lessee
shall provide Lessor Lessee's estimate of the amount of coverage required under
the Replacement Cost Insurance, and Lessor shall promptly obtain an insurance
policy insuring loss or damage to the Premises in that amount ("Lessee
Replacement Cost Estimate"). Notwithstanding anything to the contrary in the
Lease, in the event insurance proceeds are not sufficient to pay for damage or
destruction of the Premises, Lessor shall not be responsible for the payment of
any cost to replace the Premises that exceeds the applicable Lessee Replacement
Cost Estimate. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations, shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for any additional costs
resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Premises required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws
as the result of a covered cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible-amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
(b) RENTAL VALUE. The Insuring Party shall, in addition, obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the
full rental and other charges payable by Lessee to Lessor under this Lease for
one (1) year (including all real estate taxes, insurance costs, and any
scheduled rental increases). Said insurance shall provide that in the event the
Lease is terminated by reason of an insured loss, the period of indemnity for
such coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in the
premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.
(d) TENANT'S IMPROVEMENTS. If the Lessor is the Insuring Party,
the Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease, if Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations. Notwithstanding anything to the contrary in the
Lease, Lessee shall insure all Lessee Owned Alterations and Utility
Installations and all Exhibit B Improvements and, except as expressly otherwise
provided in Section 9.4, shall be entitled to any and all insurance proceeds
for, or relating to such Lessee Owned Alterations and Utility Installations and
Exhibit B Improvements.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5. Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
restoration of Lessee Owned Alterations and Utility Installations... if this
Lease is not terminated pursuant to Section 9. Lessee shall be the Insuring
Party with respect to the insurance required by this Paragraph 8.4 and shall
provide Lessor with written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be required by a Lender having a
lien on the Premises, as set forth in the most current issue of "Best's
Insurance Guide." Lessee shall not do or permit to be done anything which ????
invalidate the insurance policies referred to in this Paragraph 8. If Lessee is
the Insuring Party, Lessee shall cause to be delivered to Lessor certified ???
of policies of such insurance or certificates evidencing the existence and
amounts of such insurance with the insureds and loss payable clauses as required
by this Lease. No such policy shall be cancellable or subject to modification
except after thirty (30) days prior written notice to Lessor. Lessee shall at
least thirty (30) days prior to the expiration of such policies, furnish Lessor
with evidence of renewals or "Insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. If the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
insuring Party under this Paragraph 8, the other party may, but shall not be
required to, procure and maintain the same, but at Lessee's expense.
8.6 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
in the Lease, the parties hereto release each other and their respective
agents, employees, successors, assignees and sublessees from all liability for
injury to any person or damage to any property that is caused by or results
from a risk which is actually insured under paragraphs 8.3 and/or 8.4 of this
Lease, which is required to be insured against under paragraphs 8.3 and 8.4 of
the Lease, or which would normally be covered by "all risk" property insurance,
without regard to the negligence or willful misconduct of the entity so
released. Each party shall use its best efforts to cause each insurance policy
it obtains to provide that the insurer thereunder waives all right of recovery
by way of subrogation as required herein in connection with any injury or
damage covered by the policy.
8.7 INDEMNITY. Except for Lessor's negligence and/or breach of
express warranties and, except as set forth in the Environmental Addendum to
Lease attached hereto, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with the
occupancy of the Premises by Lessee, the conduct of Lessee's business any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Except as resulting from the
active negligence of Lessor, Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise or other property of Lessee, Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Premises, whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 INSURED LOSS. If an Insured Loss occurs, then Lessor shall, at
Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee
Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that
Lessee shall, at Lessor's election, make the repair of any damage or destruction
and, in such event, Lessor shall make the insurance proceeds available to Lessee
on a reasonable basis for that purpose. In the event Lessor elects to require
that Lessee restore the Premises, Lessee shall have twelve (12) months to
restore the Premises (during which rent shall be abated) to complete restoration
of the Premises (the "Lessee Restoration Period"). Rent shall recommence at the
end of the Lessee Restoration Period. The Lessee Restoration Period shall be
extended to the extent any delay in restoration is caused by a force majeure
even including, but not limited to, strike, labor troubles, acts of God, acts of
government, unavailability of materials or labor, or any other cause beyond the
control of Lessee. Notwithstanding the foregoing, if the required insurance was
not in force or the insurance proceeds are not sufficient to effect such repair,
the Insuring Party shall promptly contribute the shortage in proceeds (except as
to the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, the shortage in proceeds was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If Lessor does not receive such funds or within said
period assurance, Lessor may nevertheless elect by written notice to Lessee
within ten (10) days thereafter to make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect. If in such case Lessor
does not so elect, then this Lease shall terminate sixty (60) days following the
occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall
in no event have any right to reimbursement from Lessor for
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any funds contributed by Lessee to repair any such damage or destruction.
Uninsured Losses shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.
9.3 UNINSURED LOSS. If damage to the Premises that is not an Insured
Loss occurs, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee's expense and this Lease shall
continue in full force and effect but subject to Lessors ??? under Paragraph
13), Lessor may at Lessor's option, either: (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage of Lessor's desire to terminate this Lease as of the date sixty (60) days
following the giving of such notice. In the event Lessor elects to give such
notice of Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after receipt of such notice to give written notice
to Lessor of Lessee's commitment to pay for the repair of such damage totally at
Lessee's expense and without reimbursement from Lessor. Lessee shall provide
Lessor with the required funds or satisfactory assurance thereof within thirty
(30) days following Lessee's said commitment. In such event this Lease shall
continue in full force and effect, and Lessor shall proceed to make such repairs
as soon as reasonably possible and the required funds are available. In the
event Lessor gives Lessee notice of Lessor's intent to terminate the Lease as
set forth in 9.3(ii) hereof ("Termination Notice"), Lessee (in addition to, or
in lieu of Lessee's other rights in this paragraph 9.3) shall have the right to
purchase the Premises from Lessor at the greater of (a) Two Million Five Hundred
Thousand Dollars ($2,500,000), or (b) the Premises' then fair market value in
its damaged condition. Lessee shall provide Lessor notice within ten (10) days
of the receipt of Lessor's Termination Notice that Lessee intends to exercise
its option to purchase the Premises ("Notice to Purchase"). Lessor and Lessee
shall, within thirty (30) days of Lessor's receipt of the Notice to Purchase,
attempt to agree upon a fair market value for the Premises. If the parties
cannot agree upon a market value (but Lessor asserts that such value is in
excess of $2,500,000), then the fair market value of the Premises shall be
determined by real estate appraiser(s), all of whom shall be members of the
American Institute of Real Estate Appraisers and who have at least five (5)
years' experience appraising industrial and/or research and development space
located in the vicinity of the Premises and shall act in accordance with the
following procedures:
a. If the parties are unable to agree on the Fair Market Value within
the allowed time, either party may demand an appraisal by giving written notice
to the other party, which demand to be effective must state the name, address
and qualifications of an appraiser selected by the party demanding an appraisal
(the "Notifying Party"). Within ten (10) days following the Notifying Party's
appraisal demand, the other party (the "Non-Notifying Party") shall either
approve the appraiser selected by the notifying party or select a second
properly qualified appraiser by giving written notice of the name, address and
qualification of said appraiser to the Notifying Party. If the Non-Notifying
Party fails to select an appraiser within the ten (10) day period, the appraiser
selected by the Notifying Party shall be deemed selected by both parties and no
other appraiser shall be selected. If two appraisers are selected, they shall
select a third appropriately qualified appraiser. If the two appraisers fail to
select a third qualified appraiser, the third appraiser shall be appointed by
the then presiding judge of the county where the premises are located upon
application by either party.
b. If only on appraiser is selected, that appraiser shall notify the
parties in simple letter form of its determination of the Fair Market Value for
the Premises within fifteen (15) days following his selection, which appraisal
shall be conclusively determinative and binding on the parties as the appraised
Fair Market Value.
c. If multiple appraisers are selected, the appraisers shall meet not
later than ten (10) days following the selection of the last appraiser. At such
meeting the appraiser shall attempt to determine the Fair Market Value for the
Premises as of the commencement date of the extended term by the agreement of at
least two (2) of the appraisers.
d. If two (2) or more of the appraisers agree on the Fair Market Value
for the Premises at the initial meeting, such agreement shall be determinative
and binding upon the parties hereto and the agreeing appraisers shall, in simple
letter form executed by the agreeing appraisers, forthwith notify both Lessor
and Lessee of the amount set by such agreement. If multiple appraisers are
selected and two (2) appraisers are unable to agree on the Fair Market Value for
the Premises, all appraisers shall submit to Lessor and Lessee an independent
appraisal of the Fair Market Value for the Premises in simple letter form within
twenty (20) days following appointment of the final appraiser. The parties shall
then determine the Fair Market Value for the Premises by averaging the
appraisals; provided that any high or low appraisal, differing from the middle
appraisal by more than ten percent (10%) of the middle appraisal, shall be
disregarded in calculating the average.
e. The appraisers' determination of Fair Market Value shall be based
on rental of space of the same age, construction, size, location and present
condition of the Premises. In determining Fair Market Value, the appraisers
shall not consider any Lessee Owned Alterations and Utility Installations.
f. if only one appraiser is selected, then each party shall pay
one-half of the fees and expenses of that appraiser. If three appraisers are
selected, each party shall bear the fees and expenses of the appraiser it
selects and one-half of the fees and expenses of the third appraiser.
9.4 If this Lease is terminated pursuant to this Section 9, then
notwithstanding anything to the contrary in this Lease, the parties shall be
entitled to share any insurance proceeds available to the parties as a
consequence of the loss as follows:
A. Lessor shall be entitled to retain from the proceeds payable
with respect to the casualty insurance on the Premises carried by
Lessor pursuant to Section 8.3(a) only the Lessor Improvement
Value. The Lessor Improvement Value is defined as Seven Hundred
Thousand Dollars ($700,000) plus an annual increase on each
anniversary following the Commencement Date (until the Expiration
Date or earlier termination of the Lease) of Thirty-Five Thousand
Dollars ($35,000).
B. To the extent that the total of (i) the proceeds paid or
payable under the insurance actually carried by Lessor pursuant
to Section 8.3(a), (ii) any other proceeds that would have been
available from insurance Lessor is required by Section 8.3(a) to
carry, and (iii) the fair market value (determined in accordance
with Section 9.3.2) of the Premises (other than the land) in its
damaged, non-restored state, is less than the Lessor Improvement
Value, then Lessor shall be entitled to receive the proceeds paid
or payable from the insurance carried by Lessee pursuant to
Section 8.4 with respect to the Lessee's Improvements, which are
not Exhibit B Improvements, up to the amount of such difference.
C. Subject to Lessor's rights under Section 9.4.B, Lessee shall
be entitled to receive all of the proceeds paid or payable with
respect to the casualty insurance on Lessee Improvements, which
are not Exhibit B Improvements, carried by Lessee pursuant to
Section 8.4.
D. Lessee shall be entitled to receive all of the proceeds paid
or payable with respect to the casualty insurance on the Lessee
Improvements which are Exhibit B Improvements, Lessee Owned
Alterations and Utility Installations (which are not Lessee
Improvements), Trade Fixtures and any other Lessee Property, to
the extent such items are insured by Lessee.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of damage described in Paragraph 9.2
(Partial Damage - Insured), whether or not Lessor or Lessee repairs or restores
the Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration. Lessor shall notify Lessee within fifteen (15) days following any
damage to or destruction of the Premises the length of time Lessor reasonably
estimates to be necessary for repair or restoration. Lessee shall have the right
to terminate the Lease within fifteen (15) days following receipt of such
notice, if restoration or repair of the Premises will take more than two hundred
seventy (270) days.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "COMMENCE" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
9.8 TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit
as has not been, or is not then required to be, used by Lessor under the terms
of this Lease.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to any delinquency date. of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of the time within the tax fiscal year this Lease is in effect, and
Lessor shall reimburse Lessee for any overpayment after such proration. If
Lessee shall fail to pay any Real Property Taxes required by this Lease to be
paid by Lessee, Lessor shall have the right to pay the same, and Lessee shall
reimburse Lessor therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to the
Premises, and to require that such current years's Real Property Taxes to be
paid in advance to Lessor by Lessee, either: (i) in a lump sum amount equal to
the installment due, at least twenty (20) days prior to the applicable
delinquency date, or (ii) monthly in advance with the payment of the Base Rent.
If Lessor elects to require payment monthly in advance, the monthly payment
shall be that equal monthly amount equal which, over the number of months
remaining before the month in which the applicable tax installment would become
delinquent (and without interest thereon), would provide a fund large enough to
fully discharge before delinquency the estimated installment of taxes to be
paid. When the actual amount of the applicable tax bill is known, the amount of
such equal monthly advance payment shall be adjusted as required to provide the
fund needed to pay the applicable taxes before delinquency. If the amounts paid
to Lessor by Lessee under the provisions of this Paragraph are insufficient to
discharge the obligations of Lessee to pay such Real Property Taxes as the same
become due, Lessee shall pay to Lessor, upon Lessor's demand, such additional
sums as are necessary to pay such obligations. All moneys paid to Lessor under
this Paragraph may be intermingled with other moneys of Lessor and shall not
bear interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "REAL PROPERTY TAXES" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
effect, during the term of this Lease, including but not limited to a change in
the ownership of the Premises or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
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assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and subject
to the terms of Paragraph 36. Notwithstanding anything to the contrary in the
Lease, Lessor's consent to any proposed assignment or subletting shall not be
unreasonably withheld or delayed and, if not given or withheld within fifteen
(15) days following Lessee's request for consent, shall be deemed given.
(d) An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented to assignment or subletting as a noncurable Breach, Lessor
shall have the right to terminate this Lease.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damages and injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment.
(c) The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining their consent,
and such action shall not relieve such persons from liability under this Lease
of sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or anyone else responsible for the performance of Lessee's
obligations under this Lease, including any sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any.
Lessee agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested by Lessor. Lessor may condition the
effectiveness of its consent to any transfer requiring Lessor's consent upon
reimbursement to Lessor of the attorneys' fees reasonably incurred by Lessor in
connection with such transfer, up to a maximum reimbursable amount of $3,000.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessor may collect such rent and income and apply same
toward Lessee's obligations under this Lease; provided, however, that until a
Breach (as defined in Paragraph 13.1) shall occur in the performance of Lessee's
obligations under this Lease, Lessee may, except as otherwise provided in this
Lease, receive, collect and enjoy the rents accruing under such sublease. Lessor
shall not, by reason of this or any other assignment of such sublease to Lessor,
nor by reason of the collection of the rents from a sublessee, be deemed liable
to the sublessee for any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee under such sublease.
(b) In the event of a Breach by Lessee in the performance of
its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sublessee to such sublessor or for any prior
Defaults or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in
said notice as rent due and payable to cure said Default. A "DEFAULT" is defined
as a failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "BREACH"
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is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein,
the failure of Lessee to cure such Default prior to the expiration of the
applicable grace period, shall entitle Lessor to pursue the remedies set forth
in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party,
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) days following written notice by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with Applicable Law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this lease per Paragraph 30,
(vi) the guaranty of the performance of Lessees obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of thirty (30) days
after written notice thereof by or on behalf of Lessor to Lessee; provided,
however, that if the nature of Lessee's failure is such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed a
Breach of this Lease by Lessee if Lessee commences a cure within said thirty
(30) day period and thereafter diligently prosecutes such cure to completion.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, compiled with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity
of the remaining provisions.
(f) The discovery by Lessor that any financial statement given
to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
(g) If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a guarantor; (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a guarantor's refusal to honor the
guaranty; or (v) a guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice by or on behalf of Lessor to Lessee of any such event, to provide
Lessor with written alternative assurance or security, which, when coupled with
the then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the guarantors that existed at the time of execution of
this Lease.
13.2 REMEDIES. If Lessee fails to perform any of its affirmative duty
or obligation of lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may, at
its option (but without obligation to do so), perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due
and payable by Lessee to Lessor upon invoice therefor. If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check. In the event of a Breach of
this Lease by Lessee, as defined in Paragraph 13.1, with or without further
notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term thereof shall terminate
and Lessee shall immediately surrender possession to Lessor. In such event
Lessor shall be entitled to recover from Lessee: (i) the worth of unpaid Rent
which had been earned at the time of termination; (ii) the worth at the time of
award of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Lessee
proves could be reasonably avoided; and (iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of any leasing commission paid by Lessor in
connection with this Lease applicable to the unexpired term of this Lease. The
worth at the time of award of the amount referred to in provision (iii) of the
prior sentence shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and damages as are recoverable therein, or Lessor may reserve therein the
right to recover all or any part thereof in a separate suit for such rent and/or
damages. If a notice and grace period required under subparagraphs 13.1(b), (c)
or (d) was not previously given, a notice to pay rent or quit, or to perform or
quit, as the case may be, given to Lessee under any statute authorizing the
forfeiture of leases for unlawful detainer statute shall also constitute the
applicable notice for grace period purposes required by subparagraphs 13.1(b),
(c) or (d), in such case, the applicable grace period under subparagraphs
13.1(b), (c) or (d) and under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure of Lessee to
cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and abandonment and recover the Rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations. Acts
of maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver to protect the Lessor's interests under this Lease,
shall not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor
for free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of Rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by the holders of any ground lease, mortgage or deed of trust
covering the Premises whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days after such notice
are reasonably required for its performance, then Lessor shall not be in breach
if performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "CONDEMNATION"), this Lease shall terminate as
to the part taken as of the date the condemning authority takes
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title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in the same
proportion as the rentable floor area of the Premises taken bears to the
total rentable floor area of the building located on the Premises. No reduction
of Base Rent shall occur if the only portion of the Premises taken is land on
which there is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under the threat
of the exercise of such power shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the leasehold or
for the taking of the fee, or as severance damages; provided, however, that
Lessee shall be entitled to any compensation separately awarded to Lessee for
Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures.
Notwithstanding the foregoing, to the extent that the total of (i) the
condemnation proceeds paid or payable to the Lessor pursuant to prior sentence
plus (ii) the fair market value (determined in accordance with Section 9.3.2) of
the Premises (other than the land) owned by Lessor after the condemnation is
less than the Lessor Improvement Value, then Lessor shall be entitled to receive
the condemnation proceeds paid or payable to Lessee with respect to the taking
of Lessee's Improvements which are not Exhibit B Improvements up to the amount
of such difference. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of its net severance damages
received over and above the legal and other expenses incurred by Lessor in the
condemnation matter, repair any damage to the Premises caused by such
condemnation, except to the extent that Lessee has been reimbursed therefor by
the condemning authority. Lessee shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.
15. BROKERS' FEE.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of
this Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay
to said Brokers jointly, or in such separate shares as they may mutually
designate in writing, a fee as set forth in a separate written agreement
between Lessor and said Brokers (or in the event there is no separate written
agreement between Lessor and said Brokers, the sum of $________) for brokerage
services rendered by said Brokers to Lessor in this transaction.
15.4 Any buyer or transferee of Lessor's interest in this Lease,
whether such transfer is by agreement or by operation of law, shall be deemed
to have assumed Lessor's obligation under this Paragraph 15. Each Broker shall
be a third party beneficiary of the provisions of this Paragraph 15 to the
extent of its interest in any commission arising from this Lease and may enforce
that right directly against Lessor and it successors.
15.5 Lessee and Lessor each represent and warrant to the other that
it has no dealings with any person, firm, broker or finder (other than the
Brokers, if any named in Paragraph 1.10) in connection with the negotiation of
this Lease and/or the consummation of the transaction contemplated hereby, and
that no broker or other person, firm or entity other than said named Brokers is
entitled to any commission or finder's fee in connection with said transaction.
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorney's fees reasonably incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a part, Lessee and
all Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee
and such Guarantors as may be reasonably required by such lender of purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes
herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid and upon the assumption in
writing of all of Lessor's obligations under the Lease by such transferee or
assignee, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. NOTICES.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or by courier
service) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease
shall be that Party's address for delivery or mailing of notices purposes.
Either Party may by written notice to the other specify a different address for
notice purposes, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate by
written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given seventy-two (72) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is received on
a Sunday or legal holiday, it shall be deemed on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee, of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any preceding Default or
Breach by Lessee of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted. Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this
Lease.
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27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof subject to
the terms and conditions set forth herein. Lessee agrees that the Lenders
holding any such Security Device shall have no duty, liability or obligation to
perform any of the obligations of Lessor under this Lease, but that in the event
of Lessor's default with respect to any such obligation, Lessee will give any
Lender whose name and address have been furnished Lessee in writing for such
purpose notice of Lessor's default and allow such Lender thirty (30) days
following receipt of such notice for the cure of said default before invoking
any remedies Lessee may have by reason thereof. If any Lender shall elect to
have this Lease and/or any Option granted hereby superior to the lien of its
Security Device and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof. Notwithstanding
anything to the contrary in the Lease:
A. The Lessee's obligations under this Lease are conditioned upon
(i) recordation of a memorandum of this Lease in form acceptable to Lessee; (ii)
Lessee's ability to obtain, at its cost, a title insurance policy in form
acceptable to Lessee, (a) insuring that Lessee holds a valid leasehold interest
in the Premises in accordance with the terms of this Lease and the Lessee's
rights to purchase the Premises as set forth in this Lease subject only to the
standard exception to coverage contained in such policies and other exceptions
to title acceptable to the Lessee, and (b) insuring Lessee's Lender that its
leasehold mortgage on Lessee's interest in this Lease is a first lien on such
Lessee's interest subject only to the standard exceptions to coverage contained
in such policies and other exceptions to title acceptable to the Lender; (iii)
reconveyance of the lien on the Premises recorded by Sumitomo Bank; and (iv)
receipt by Lessee of a recognition agreement, in form acceptable to Lessee, from
the holder of the first lien and any other liens on Lessor's interest in the
Premises.
B. This Lease shall not be subject to or subordinate to any ground
or underlying lease or to any lien, mortgage, deed of trust, or security
interest now or hereafter affecting the Premises, nor shall Lessee be required
to execute any documents subordinating this Lease, unless the ground lessor,
lender, or other holder of the interest to which this Lease shall be
subordinated contemporaneously executes a recognition and nondisturbance
agreement which (i) provides that this Lease shall not be terminated, so long as
Lessee is not in default under this Lease and (ii) recognizes all of Lessee's
rights hereunder including any and all option rights to purchase the Premises
and extend the term of the Lease.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent. Lessee shall have no obligation to
attorn to any successor-in-interest or ground lessor, not to execute any
documents evidencing attornment, unless the successor-in-interest or ground
lessor in question assumes, in writing, all obligations of Lessor under this
Lease.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "NON-DISTURBANCE AGREEMENT") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof and/or purchase the Premises, will not be disturbed so long as
Lessee is not in Breach hereof and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or to declare rights hereunder, the Prevailing Party
(as hereafter defined) or Broker in any such proceeding, action, or appeal
thereon, shall be entitled to reasonable attorney's fees. Such fees may be
awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment. The term, "PREVAILING
PARTY" shall include, without limitation, a Party or Broker who substantially
obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise upon twenty-four (24) hours notice to Lessee for the
purposes set forth in paragraph 6.4 and/or for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "FOR LEASE" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
Any entry of the Premises by Lessor and Lessor's agents shall comply with all
reasonable security measures of Lessee and shall not impair Lessee's operations
more than reasonably necessary. During any such entry, Lessor and Lessor's
agents shall at all times be accompanied by Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Except as set forth in paragraph 58 hereof, Lessee shall not place
any sign upon the Premises, except that Lessee may, with Lessor's prior written
consent, install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business. The installation of any sign on the Premises by
or for Lessee shall be subject to the provisions of Paragraph 7 (Maintenance,
Repairs, Utility Installations, Trade Fixtures and Alterations). Unless
otherwise expressly agreed herein, Lessor reserves all rights to the use of the
roof and the right to install, and all revenues from the installation of, such
advertising signs on the Premises, including the roof, as do not unreasonably
interfere with the conduct of Lessee's business.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent required under paragraph 7 hereof shall be paid by Lessee to
Lessor upon receipt of an invoice and supporting documentation therefor. Subject
to Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
interest. Lessor's consent to any, assignment of this Lease or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) The failure to specify herein any particular condition to Lessor's
consent shall not preclude the imposition by Lessor at the time of consent of
such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given.
37. GUARANTOR.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS.
39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or renew this
Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first refusal to lease other property of Lessor or the right of first offer to
lease other property of Lessor; (c) the right to purchase the Premises, or the
right of first refusal to purchase the Premises, or the right of first offer to
purchase the Premises, or the right to purchase other property of Lessor, or the
right of first refusal to purchase other property of Lessor, or the right of
first offer to purchase other property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereto, as
well as any permitted assignee or sublessee of the Premises pursuant to
paragraphs 53 and 55 of this Lease, and cannot be voluntarily or involuntarily
assigned or exercised by any person or entity other than said parties. Except as
set forth herein, the Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
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39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options to extend or renew this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i) during
the period of time any monetary obligation due Lessor from Lessee is unpaid.
The effectiveness of the exercise of any option provided to
Lessee herein shall be conditioned upon the simultaneous cure of any existing
defaults by Lessee under this Lease, of which Lessee has received written
notice by Lessor prior to the date of the option exercise.
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care and cleanliness of the grounds the parking, and
unloading of vehicles, and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invites and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to the Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall have joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF
ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES: THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE
CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at:_________________________ Executed at: San Jose, CA
________________________
on:__________________________________ on: 12/12/96
_________________________________
By LESSOR: By LESSEE:
Patrick & Betty Ng, Co-Trustees for Symyx Technologies, Inc.,
_____________________________________ _____________________________________
the Ng Living Trust, dated a California corporation
December 21, 1987
_____________________________________ _____________________________________
By:/s/PATRICK NG By:/s/ISY GOLDWASSER
_____________________________________ _____________________________________
Name Printed: Patrick Ng Name Printed: Isy Goldwasser
_____________________________________ _____________________________________
Title:_______________________________ Title: V.P. of Corporate Development
_____________________________
By: /s/ BETTE NG By:
_____________________________________ _____________________________________
Name Printed: Bette Ng Name Printed:
_____________________________________ _____________________________________
Title:_______________________________ Title:
_____________________________
Address:_____________________________ Address:_____________________________
_____________________________ _____________________________
Tel. No. ( )_______________________ Tel. No. ( )_______________________
Fax No. ( )________________________ Fax No. ( )________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
PAGE 10
<PAGE> 11
EXHIBIT C
1. Letter from Robert L. Hines, Landels, Ripley & Diamond to Jeff Gilman
dated August 5, 1996 Re: Final Cleanup Objectives -- MCC Property and
Vicinity, Santa Clara, California
2. Letter from Stephen Morse, California Regional Water Quality Control
Board to Edward Hayes, dated July 31, 1996 Re: Metropolitan Corporate
Center -- Proposal for an Additional Monitoring Well
3. Letter from Robert L. Hines, Landels, Ripley & Diamond to Jeff Gilman
dated July 25, 1996 Re: Final Cleanup Objectives -- MCC Property and
Vicinity, Santa Clara, California
4. Work Plan to Install One Off-Site Monitoring Well, Metropolitan Corporate
Center Property, Santa Clara, California, Levine-Fricke, dated July 15,
1996
5. Letter from Jeffrey A. Gilman, McCulley, Frick & Gilman, Inc. dated May
25, 1990 Re: Characterization of Ground-Water Quality Conditions -
Reliance Technical Services, Santa Clara, California
6. Characterization of Ground-Water Quality Conditions, McCulley, Frick &
Gilman, Inc. dated May 25, 1990
<PAGE> 12
ADDENDUM TO THE LEASE DATED NOVEMBER 15, 1996 BETWEEN PATRICK AND BETTE NG, AS
TRUSTEES FOR THE NG'S FAMILY TRUST. ("LANDLORD") AND SYMYX TECHNOLOGIES
("TENANT") FOR THE PROPERTY LOCATED AT 3100 CENTRAL EXPRESSWAY, SANTA CLARA,
CALIFORNIA ("PREMISES").
Page 1 of 3
This Addendum to Lease supplements the Lease as shown below:
49. MONTHLY MINIMUM RENT:
<TABLE>
<CAPTION>
Months of Initial Term Monthly Rent
<S> <C>
01-36 $21,316.10 NNN
37-48 $22,995.80 NNN
49-60 $24,595.50 NNN
61-72 $26,235.20 NNN
73-84 $27,874.90 NNN
85-86 $29,514.60 NNN
97-108 $31,154.30 NNN
109-120 $32.794.00 NNN
121-132 $34,433.70 NNN
</TABLE>
50. OPTION TO PURCHASE:
Provided Lessee is not in default under this Lease at the time of
exercise, Lessee shall have the option to purchase the Premises at the
Purchase Price of Three Million Nine Hundred Thousand and 00/100
(3,900,000.00) Dollars. Said option can only be exercised in writing
during the seventy-third (73rd) through the seventy-eighth (78th) month of
the term. Close of escrow must occur on or before the last day of the
seventy eighty (78th) month or the option to purchase shall become null
and void. Notwithstanding the foregoing, in the event that close of escrow
has not occurred by the 78th month as the result of a delay caused by
Lessor ("Lessor Delay"), Close of escrow shall be extended beyond the 78th
month in an amount equal to the period of any Lessor Delay.
51. TAX DEFERRED (IRS CODE 1031) EXCHANGE:
In the event that the Option to Purchase outlines in paragraph 50 above is
exercised by Lessee ("Buyer"), "Buyer" agrees to cooperate in fulfilling
Lessor's ("Seller's") intent to effect a tax deferred exchange by
performing any and all reasonable acts as may be required to effect such
exchange provided, however, that "Buyer" does not incur any additional
expense or liability as a result thereof.
52. CONDITION OF PREMISES AT LEASE COMMENCEMENT:
Tenant agrees to take possession of the Premises in its present as-is
condition. Landlord makes no representations or warranties regarding such
systems and components.
53. TENANT IMPROVEMENTS:
53.1 Lessee agrees that it shall expend no less that $4,000,000 on the
"Lessee's Improvements" to the Premises which improvements shall include, at a
minimum, a new roof and flooring, seismic upgrades, asbestos removal, upgrades
to the HVAC systems, electrical and upgrades to bring the Premises into
compliance with the Americans with Disabilities Act ("ADA") which improvements
are outlined on the Preliminary Plan approved by Lessor and attached hereto as
Exhibit A. Such Lessee Improvements shall include the improvements identified
on Exhibit B ("Exhibit B Improvements"). Lessor hereby consents to Lessee's
construction of the Lessee Improvements as set forth in Exhibits A and B.
53.2 Lessee shall cause its architect to cause Final Plans for the Lessee
Improvements to be completed. Lessee shall submit the Final Plans to Lessor
fifteen (15) days before commencing construction of the Lessee Improvements.
Lessor shall have ten (10) days to provide Lessee with any objections to such
plans which shall be limited to (i) objections that the Lessee Improvements will
endanger the structure; or (ii) objections that the Lessee Improvements to the
exterior of the Premises are not reasonably aesthetic. Lessee and Lessor shall
work cooperatively to resolve such objections.
53.3 Lessee shall construct the Lessee Improvements in accordance with the
Final Plans and applicable Laws and obtain all applicable governmental permits
and authorizations required for the construction of such improvements. Lessee
shall notify Lessor in writing at least five (5) days before beginning actual
construction of the Lessee Improvements so that Lessor can post and record an
appropriate notice of nonresponsibility. Before commencing the work, Lessee
shall provide evidence that it has obtained all of the insurance required under
the Lease.
53.4 Lessee and its agents and contractors shall have access to and may
enter upon the Premises at any time and from time to time after the
Construction Commencement Date for the purpose of inspecting, surveying,
designing, planning and constructing the Lessee Improvements and installing
trade fixtures, phone and telecommunications equipment and other equipment.
53.5 All Lessee Improvements, except Exhibit B Improvements, shall become
the property of Lessor in the event that this Lease terminates as a consequence
of Lessee's default under the terms of the Lease beyond the time period
permitted under the Lease for any cure of such default by Lessee or Lender.
53.6 Lessor acknowledges that the Lessee Improvements are subject to a
"lease line" to be obtained from a Lender ("Lender"). Lessor agrees that (i)
Lessee may make its interest in this Lease subject to a leasehold deed of trust
in favor of such Lender, and (ii) Lessor shall have no right, title or interest
whatsoever in the Exhibit B Improvements.
53.7 Notwithstanding anything to the contrary in this Lease, so long as
the Credit Extension (as defined herein) is in effect and until Lessee's
obligations to Lender under the Credit Extension have been fully satisfied and
performed, the following provisions shall apply:
(1) Lessor agrees that Lessee may assign this Lease to Lender without
Lessor's consent, and Lender may thereafter assign or sublease the premises,
provided that (i) any subsequent assignee shall assume in writing the
obligations of Lessee under the Lease; (ii) the use of the Premises by the
assignee or sublessee is permitted by the use provision in paragraph 1.8 of the
Lease and does not violate any applicable governmental rule, ordinance or
regulation; (iii) the assignee or sublessee is in Lender's reasonable business
judgment of reputable character and, after taking into consideration the
security for the transferee's performance, prospectively capable of performing
its financial obligations under the Lease. Lessor acknowledges that any
transferee with a financial condition not materially less than Lessee's
financial condition on the Effective Date shall satisfy the criteria specified
in subpart (iii) of the prior sentence. Any assignment or subletting by Lender
shall be subject to the bonus rent provisions of paragraph 55 of this Lease,
provided however, that any assignment or sublease of the Premises by the Lender
which is made as part of a transaction involving the transfer of a substantial
amount of the Lessee's assets located in the Premises to such assignee or
sublessee shall not be subject to the bonus rent provisions of paragraph 55 and
Lender shall be entitled to all payments of Base Rent resulting therefrom.
(2) Lessor further agrees to provide Lender written notice of any
breach, default or event of default under the Lease (each a "Default Notice")
simultaneously with the giving of notice of the same to Lessee or, if no such
notice is required under the Lease, at least thirty (30) days prior to the date
Lessor would be entitled to terminate the Lease. Each such notice shall be sent
to the address of Lender which shall be provided by Lessee or such other
address as Lender may from time to time provide to Lessor, and shall be deemed
delivered to Lender (i) in the case of notice by letter, five (5) business days
after deposited in the United States mail registered and return receipt
requested, (ii) in the case of notice by overnight courier, two (2) business
days after delivery to such courier and (iii) in the case of notice given by
telex or telecommunication, when given or sent with electronic confirmation of
receipt. Any notice to Lender required in this Lease shall be made at the
following address unless otherwise directed in writing by Lender or Lessee:
Lighthouse Capital Partners
100 Drake's Landing Road
Suite 260
Greenbrae, CA 94904
Attn: Thomas Conneely
(3) During any time period when Lessee is in default under the Lease,
Lender shall have the option, but not the obligation, to cure any such default.
Lessor shall accept such cure is completed (i) within thirty (30) days after
delivery of the Default Notice with respect to the breach to Lender, if such
cure can reasonably be accomplished by Lender using all due diligence within
such thirty (30) days period, or (ii) with such longer period after delivery of
the Default Notice to Lender as may be reasonably required to cure the default
using all due diligence ("Lender's Cure Period"). Lessor agrees not to
terminate the Lease until the expiration of Lender's Cure Period. Lessor shall
accept Lender's cure as fully as if Lessee had fully performed its obligation
under the Lease. Upon curing any such default, Lender shall be subrogated to
the rights of Lessor against Lessee for recovery of the cost incurred by Lender
to cure the default (other than termination of the Lease), and, as between
Lessor and Lessee, such cured defaults shall no longer exist. Lessor reserves
all of its rights to proceed against Lessee as to any default not covered by
Lender as herein provided.
(4) Lessor agrees that Lender shall have the right to enter into the
Premises and take all collateral actions required in connection therewith.
Lessor further agrees that Lessor has no right, title or interest in the
Exhibit B Improvements and that Lender shall have the right, subject to the
terms of the Lease, but not the obligation, to remove the Exhibit B
Improvements at any time during the term of the Lease or at the expiration or
termination thereof, provided that (i) Lender shall promptly repair any damage
to the premises caused by such removal; and (ii) Lender shall pay Lessor
reasonable storage charges for the Exhibit B Improvements as measured from the
date Lender receives the Default Notice to the date the Exhibit B Improvements
are removed from the Premises by Lender.
(5) Lessor shall execute and deliver to Lender any reasonable
documentation reasonably required in connection with the Lender's extension of
credit to Lessee ("Credit Extension"), including but not limited to (i) a
Lessor's waiver of its rights with respect to the Exhibit B Improvements, and
(ii) a Lessor estoppel certificate.
(6) [intentionally deleted]
(7) During the term of the Lease, Lender shall, with reasonable
advance notice to Lessee, have the right to enter upon the premises to inspect
the Exhibit B Improvements. Lender shall exercise its rights hereunder in a
manner that minimizes any interference with Lessee's business.
(8) Lender is a third party beneficiary of the agreements and
covenants contained in this Lease and shall have the right to enforce the terms
hereof against Lessor and Lessee.
<PAGE> 13
ADDENDUM TO THE LEASE DATED NOVEMBER 15, 1996 BETWEEN PATRICK AND BETTE NG, AS
TRUSTEES FOR THE NG'S FAMILY TRUST, ("LANDLORD") AND SYMYX TECHNOLOGIES
("TENANT") FOR THE PROPERTY LOCATED AT 3100 CENTRAL EXPRESSWAY, SANTA CLARA,
CALIFORNIA ("PREMISES").
Page 2 of 3
Lessee shall notify Lessor in writing of the name, address, contact person
and phone number of Lender within three (3) days from the financing being
put in place.
54. LESSEE RIGHT TO SELECT CONTRACTOR AND ARCHITECT:
The Tenant Improvement Contractor and Interior Architect will be selected
by Lessee. Lessor will have the right to approve Lessee's contractor which
approval shall not be unreasonably withheld.
55. RIGHT TO ASSIGN OR SUBLEASE:
Notwithstanding anything to the contrary in the Lease, Lessee shall have
the right to assign all or any portion of its interest under this Lease or
sublet all or any (i) a subsidiary, division or corporation controlling,
controlled by or under common control with Lessee; (ii) a successor
corporation related to Lessee by merger, consolidation, nonbankruptcy
reorganization, or government action provided the transferee has the
financial capacity to perform the obligations of the transferee with
respect to this Lease; (iii) a purchaser of substantially all of Lessee's
Property located at the Premises as a going concern, provided the
transferee has the financial capacity to perform the obligations of the
transferee with respect to this Lease, and/or (iv) Lender. Moreover, for
the purpose of this Lease, the sale or transfer of any amount of Lessee's
capital stock through any public exchange, shall not be deemed an
assignment, subletting, or any other transfer of the Lease or the Premises.
Lessor shall not be entitled to share any proceeds whatsoever of an
assignment or subletting described in subparts (i), (ii), and (iv), above,
nor in any proceeds of an assignment or subletting pursuant to subpart
(iii), to the extent such subpart (iii) proceeds are given as consideration
for the transfer of Lessee's Property (other than Lessee Improvements which
are not Exhibit B Improvements). Lessee shall obtain approval from Lessor
for any Sublease to another third party tenant, which approval shall not be
unreasonably withheld. Lessee shall be entitled to 75%, and Lessor shall be
entitled to 25% of any bonus rent received in the event of any Sublease
except, however, that Lessor and Lessee shall be permitted to first
subtract from such bonus rent Lessor and Lessee's reasonable expenses
incurred in subleasing expenses, including, but not limited to attorneys
fees incurred in connection with such subletting (up to a maximum amount of
$10,000), leasing commission and the out-of-pocket cost of any alterations
or other performance required of Lessee in the sublease agreement with the
sublessee reasonably incurred by Lessee. Bonus rent shall be defined as the
monthly rent actually received as a result of a sublease, which is in
excess of the monthly rent delineated in the Lease for that same monthly
period.
56. SOIL CONDITION OF PROPERTY/HAZARDOUS MATERIAL INDEMNIFICATION:
Prior to Lease execution, Lessor and Lessee shall (i) review all existing
environmental information relating to the property on which the Premises
are located, and (ii) conduct any other environmental studies which may be
desired at either party's request (at the expense of the requesting party).
PLEASE SEE ATTACHED ENVIRONMENTAL ADDENDUM TO LEASE.
57. AMERICANS WITH DISABILITIES ACT:
Landlord and Tenant acknowledge that the premises is a "commercial
facility" as such term is defined in the Title III of the Americans with
Disabilities Act 42 U.S.C. Section 1201 et seq. (the "ADA"). If it is
determined by a governmental authority with applicable jurisdiction that,
as of the date Landlord delivers the premises to Tenant, the premises is
not in compliance with Title III of the ADA as applicable to commercial
facilities. Landlord shall not be responsible to make such modifications to
the premises as may be required by such governmental authority. Tenant
acknowledges that the foregoing obligation of Landlord shall not apply to
modifications to the premises required as a result of or related to (a) the
tenant improvements, (b) alterations made by or on behalf of Tenant, or (c)
the disability of an employee, prospective employee or contractor of
Tenant.
<PAGE> 14
ADDENDUM TO THE LEASE DATED NOVEMBER 15, 1996 BETWEEN PATRICK AND BETTE NG, AS
TRUSTEES FOR THE NG'S FAMILY TRUST, ("LANDLORD") AND SYMYX TECHNOLOGIES
("TENANT") FOR THE PROPERTY LOCATED AT 3100 CENTRAL EXPRESSWAY, SANTA CLARA,
CALIFORNIA ("PREMISES").
Page 3 of 3
58. SIGNAGE:
Tenant shall have the right without consent of Lessor to install the
maximum allowable signage on the site per City of Santa Clara's sign
ordinance, at Tenant's expense. At the expiration or earlier termination
of the Lease, Tenant shall remove all its signs at its own expense and
repair all damage caused by such removal.
59. COMMISSION AND REPRESENTATION:
BT Commercial represents the Lessor and Cornish & Carey and Catalyst Real
Estate Group jointly represent the Lessee in this transaction. The Leasing
commission shall be paid by the Lessor in accordance with the Exclusive
Listing Agreement between Lessor and BT Commercial. The commission shall
be payable fifty percent (50%) upon lease execution and the remaining 50%
balance shall be payable in 6 equal monthly installments on the 2nd through
the 7th month of the Lease term.
In the event that the Lessee exercises the option to purchase contained in
Paragraph 50 herein, owner shall pay a sales commission equal to 5% of the
purchase price to brokers upon close of escrow, less the unearned portion
of the leasing commission, which shall be prorated as of the closing date.
60. Lessor acknowledges that Lessee may and has the consent of Lessor to, as
part of Lessee Improvements, increase the size of the second floor of the
Premises ("Second Floor Expansion"), thereby increasing the actual square
footage of the Premises. Lessor agrees that, in consideration for Lessee's
increasing the value of the Premises by such Second Floor Expansion, and
regardless of the actual increase in square footage resulting from such
Second Floor Expansion, Base Rent during the Original Term and any option
period or other extension thereof shall be based on the square footage set
forth in paragraph 1.2 of the Lease.
61. The following terms and conditions shall apply to any exercise by Lessee
of its right to purchase the Premises as set forth in this Lease:
(1) Upon notice from Lessee of its intent to exercise any option to
purchase the Premises under the Lease, the parties hereto shall open an
escrow with Chicago Title Company, San Jose, California ("Escrow Holder"),
and each party shall deposit with the Escrow Holder duly executed escrow
instructions in a form appropriate to consummate the purchase and sale
herein contemplated provided, however, Lessee's obligations under that
escrow shall be made expressly contingent on Lessee exercising its option
to purchase. Lessee's option to purchase shall be exercised, if at all, by
written notice to Escrow Holder within any applicable option period. The
Escrow Instructions shall provide for the closing of escrow on or before
the first business day thirty (30) days after Escrow Holder receives
written notice of Lessee exercising its option. Notwithstanding the
preceding sentence, in the event Lessee is exercising its option to
purchase under paragraph 50 hereof, closing of escrow shall occur on the
sooner of (i) the first business day thirty (30) days after Escrow Holder
receives written notice of Lessee exercising its option; or (ii) the last
business day before the end of the 78th month of the Lease Term. If escrow
does not close within said periods set forth herein due to the fault of
Lessee, then Lessor may cancel the escrow by delivering written notice of
cancellation to Escrow Holder and all rights of Lessee under this option
to purchase shall terminate; provided, however, that the closing periods
set forth herein shall be extended for any periods of delay caused by the
action or inaction of Lessor.
(2) Lessor shall deposit into escrow (for recordation at the close of
escrow) a grant deed to Lessee conveying title to the Premises to Lessee
or at Lessee's election, to any of Lessee's successors, assignees,
nominees or designees, without Lessor's further approval.
(3) Lessee shall be entitled to Lessor's reversionary right to
possession of the Premises at the close of escrow.
(4) Real property taxes, note and trust deed payments of principal
and interest, assessments, and the prepaid premiums on any insurance
Lessee assumes shall be prorated to the close of escrow.
(5) Lessee's title to the Premises shall be insured by an ALTA Owners
Policy of Title Insurance, issued by Chicago Title Insurance Company with
liability in the amount of the purchase price showing title to the Premises
vested in Lessee, subject only to real property taxes not delinquent and
such other non-monetary liens, easements, encumbrances, covenants,
conditions and restrictions as may be approved in writing by Lessee as set
forth below. Within ten days of the exercise of the option, Lessor shall
provide Lessee with a preliminary title report showing the state of title
to the Premises, together with copies of all recorded documents mentioned
therein. Lessee promptly shall notify Lessor of any unacceptable exceptions
to the preliminary title report so that Lessor may secure the removal
thereof. Failure of Lessee to disapprove in writing any exceptions shown on
said preliminary title report within ten working days after receipt thereof
shall be deemed approval thereof.
(6) Each party shall, at the request of the other, execute,
acknowledge and deliver whatever additional instruments and do such other
acts as may be required or convenient in order to accomplish and carry
forward the intent and purpose of this option to purchase.
(7) Under the Foreign Investment and Real Property Tax Act (FIRPTA),
Internal Revenue Code Section 1445, every Buyer of U.S. real property must,
unless an exemption applies, deduct and withhold from Seller's proceeds
ten percent (10%) of the gross sales price. The primary exemptions are: no
withholding is required if (a) Seller provides Buyer with an Affidavit
under penalty of perjury, that Seller is not a "foreign person," or (b)
Seller provides Buyer with a "qualifying statement" issued by the Internal
Revenue Service, or (c) if Buyer purchases real property for use as a
residence and the purchase price is Three Hundred Thousand Dollars
($300,000.00) or less and if Buyer or a member of Buyer's family has
definite plans to reside at the property for at least fifty percent (50%)
of the number of days it is in use during each of the first two twelve
month periods after transfer. Lessor and Lessee agree to execute and
deliver as directed any instrument, affidavit and statement, or to perform
any act reasonably necessary to carry out the provisions of FIRPTA and
regulations promulgated thereunder.
(8) Closing costs shall be paid by the parties in accordance with
the custom and practice in Santa Clara County, California.
(9) A legal description of the Premises subject to Lessee's option to
purchase are attached hereto as Exhibit D.
The provisions of this Addendum shall modify and supersede the provisions of
the lease where inconsistent.
READ AND APPROVED:
LESSOR: LESSEE:
The Ng Family Trust Symyx Technologies
/s/ PATRICK NG /s/ ISY GOLDWASSER
- ----------------------- ---------------------------------
/s/ BETTE NG
- ----------------------- ---------------------------------
Date: 12/12/96 Date: 12/12/96
- ----------------------- ---------------------------------
<PAGE> 15
ENVIRONMENTAL ADDENDUM TO LEASE
This is an Environmental Addendum to the Lease dated November 1, 1996
("Lease") between Patrick and Betty Ng as Trustees for the Ng's Family Trust,
(Lessor) and Symyx Technologies (Lessee) for the property located at 3100
Central Expressway, Santa Clara, California (Property).
The parties agree that notwithstanding anything to the contrary in the Lease:
1. HAZARDOUS MATERIALS DEFINED.
"Hazardous Materials" are defined as any chemicals, substances, or
materials, including, without limitation, petroleum, petroleum products,
asbestos, polyclorinated biphenyls, or radioactive materials, which have been
or are hereafter determined by any federal, state, or local government to be
capable of posing a risk of injury to health, safety or the environment.
2. EFFECTIVE DATE DEFINED.
The "Effective Date" is that date on which the lease of the Property is
effective between Lessor and Lessee.
3. INVESTIGATION AND REMEDIATION BY LESSOR.
a. Lessor hereby agrees, at its sole cost and expense, to take all
such action as is or may be necessary and proper to the satisfaction of all
appropriate governmental agencies to investigate, categorize, monitor, contain,
remediate, cleanup and remove Hazardous Materials released, discharged or
placed on or under the Property prior to the Effective Date if arising out of
an act or omission of a third party other than an employee or agent of the
Lessee, or than one whose act or omission occurs in connection with a
contractual relationship with Lessee. Notwithstanding anything to the contrary
in the lease (including without limitation, Lessee's repair obligations,
Lessee's obligation to reimburse Lessor for its costs and expenses under
various circumstances, and Lessee's duty to comply with laws, rules, and
regulations), Lessee shall have no responsibility for and Lessor for itself and
its beneficiaries, heirs, personal representatives, successors, and assigns
hereby waives and releases any and all claims, actions, suits, proceedings,
judgments, losses, costs, personal injuries, damages, liabilities,
deficiencies, fines, penalties, damages, attorneys' fees, consultants' fees,
investigations, detoxifications, remediations, removals, and expenses of every
type and nature, directly or indirectly arising out of or in connection with,
and all rights to join Lessee, its officers, directors, employees, subtenants,
successors and assigns in any litigation or proceeding, arising out of or in
connection with, any Hazardous Materials which are present on the Premises (or
the soil, groundwater, surface water or ambient air thereof) as of the delivery
of possession of the Premises to Lessee for construction of the Lessee
Improvements or which thereafter migrate or percolate into, onto or under the
Premises from a source outside the Premises. In this regard, Lessor hereby
waives the benefits of California Civil Code Section 1542 which provides as
follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release which if known by him must have materially
affected his settlement with the debtor."
Lessor's action shall include, without limitation, any work required under any
applicable federal, state, or local law or regulation, by any judicial order,
by any governmental authority, or in order to comply with any agreements with
any governmental authority in connection with the presence of Hazardous
Material on the Property, which work Lessor shall perform or cause to be
performed in compliance with such law, regulation, order, or agreement.
b. Lessor and Lessee agree to reasonably cooperate with each other
with respect to any issues that arise in connection with the presence of
Hazardous Materials on or under the Property prior to the Effective Date;
provided, however, that such cooperation shall not require Lessee to incur any
costs or expenses.
4. FAILURE TO ACT BY LESSOR.
In the event Lessor shall fail to timely commence, or cause to be
commenced, or fail to diligently prosecute to completion any work or action
required by this Agreement or otherwise fail to take any action or fail to
honor any obligation required by this Agreement, Lessee may, upon thirty (30)
days prior written notice to Lessor cause such work to be performed or such
action to be taken (but shall not be required to do so) and all costs and
expenses incurred by Lessee in connection therewith shall be immediately due
and payable upon demand by Lessee.
5. INDEMNIFICATION BY LESSOR.
Lessor hereby agrees to indemnify, defend (by counsel reasonably
approved by Lessee), and hold harmless Lessee, and Lessee's descendants,
dependents, heirs, executors, administrators, agents, servants, tenants,
assigns, lenders, and successors-in-interest (together with each of their
respective shareholders, partners, directors, officers, employees, agents,
representatives, successors, and assigns), from and against any suit,
proceeding, claim (including without limitation third party claims for personal
injury or real or personal property damage), action, judgment, fine, penalty,
loss, cost, damage, liability (including without limitation sums paid in
settlement of claims), or expense (including but not limited to investigation
costs and attorneys' and consultants' fees) arising out of, related to, or in
any way connected way with Hazardous Materials released, discharged or placed on
or under the Property prior to the Effective Date if arising out of an act or
omission of a third party other than an employee or agent of the Lessee, or than
one whose act or omission occurs in connection with a contractual relationship
with the Lessee. Notwithstanding anything to the contrary in the lease
(including without limitation, Lessee's repair obligations, Lessee's obligation
to reimburse Lessor for its costs and expenses under various circumstances, and
Lessee's duty to comply with laws, rules, and regulations), Lessee shall have no
responsibility for and Lessor for itself and its beneficiaries, heirs, personal
representatives, successors, and assigns hereby waives and releases any and all
claims, actions, suits, proceedings, judgments, losses, costs, personal
injuries, damages, liabilities, deficiencies, fines, penalties, damages,
attorneys' fees, consultants' fees, investigations, detoxifications,
remediations, removals, and expenses of every type and nature, directly or
indirectly arising out of or in connection with, and all rights to join Lessee,
its officers, directors, employees, subtenants, successors and assigns in any
litigation or proceeding, arising out of or in connection with, any Hazardous
Materials which are present on the Premises (or the soil, groundwater, surface
water or ambient air thereof) as of the delivery of possession of the Premises
to Lessee for construction of the Lessee Improvements or which thereafter
migrate or percolate into, onto or under the Premises from a source outside the
Premises. In this regard, Lessor hereby waives the benefits of California Civil
Code Section 1542 which provides as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release which if known by him must have materially
affected his settlement with the debtor."
6. RELEASE BY LESSOR.
Lessor hereby releases Lessee, and Lessee's descendants, dependents,
heirs, executors, administrators, agents, servants, tenants, assigns, lenders
and successors-in-interest (together with each of their respective shareholders,
partners, directors, officers, employees, agents, representatives, successors,
and assigns), from and against any and all claims, demands, obligations, causes
of action, and liability arising out of, related to, or in any way connected
with Hazardous Materials for which the Lessor is indemnifying Lessee hereunder.
Lessor agrees never to commence, aide in any way or prosecute against Lessee, or
any of his above-referenced successors or assigns, any action or other
proceeding based upon any claims, demands, causes of action, obligations,
damages, or liabilities covered by this release. Lessor further expressly waives
any rights or benefits available to it with respect to this release under the
provisions of Section 1542 of the California Civil Code, which provides:
A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor.
Lessor has been apprised of and fully understands the statutory language of
Section 1542 of the California Civil Code and, with this understanding, elects
to and does assume all risk for claims, known or unknown, covered by this
release.
7. INVESTIGATION AND REMEDIATION BY LESSOR. Lessor's obligations under
this Agreement specifically include those arising out of Hazardous Materials
which flow, diffuse, migrate or percolate into, onto or under the Property as
the result of an act or omission of a third party other than an employee or
agent of the Lessee, or than one whose act or omission occurs in connection with
a contractual relationship, existing directly or indirectly with the Lessee.
8. INVESTIGATION AND REMEDIATION BY LESSEE.
a. Lessee hereby agrees, at its sole cost and expense, to take all
such action as is or may be necessary and proper to the satisfaction of all
appropriate governmental agencies to investigate, categorize, monitor, contain,
remediate, cleanup and remove Hazardous Materials released, discharged or placed
on the Property on or after the Effective Date by Lessee or one whose act or
omission occurs in connection with a contractual relationship with the Lessee.
Notwithstanding anything to the contrary in the lease, Lessor shall have no
responsibility for and Lessee for itself and its beneficiaries, heirs, personal
representatives, successors, and assigns hereby waives and releases any and all
claims, actions, suits, proceedings, judgments, losses, costs, personal
injuries, damages, liabilities, deficiencies, fines, penalties, damages,
attorneys' fees, consultants' fees, investigations, detoxifications,
remediations, removals, and expenses of every type and nature. Lessee's action
shall include, without limitation, any work required under any applicable
federal, state, or local law or regulation, by any judicial order, by any
governmental authority, or in order to comply with any agreements with any
governmental authority in connection with the presence of Hazardous Material on
the Property, which work Lessee shall perform or cause to be performed in
compliance with such law, regulation, order, or agreement.
b. Lessee and Lessor agree to reasonably cooperate with each other
with respect to any issues that arise in connection with the presence of
Hazardous Materials on the Property on or after the Effective Date; provided,
however, that such cooperation shall not require Lessor to incur any costs or
expenses.
9. FAILURE TO ACT BY LESSEE
In the event Lessee shall fail to timely commence, or cause to be
commenced, or fail to diligently prosecute to completion any work or action
required by this Agreement or otherwise fail to take any action or fail to honor
any obligation required by this Agreement, Lessor may, upon thirty (30) days
prior written notice to Lessee cause such work to be performed or such action to
be taken (but shall not be required to do so) and all costs and expenses
incurred by Lessor in connection therewith shall be immediately due and payable
upon demand by Lessor.
10. INDEMNIFICATION BY LESSEE.
Lessee hereby agrees to indemnify, defend (by counsel reasonably
approved by Lessor), and hold harmless Lessor, and Lessor's descendants,
dependents, heirs, executors, administrators, agents, servants, tenants,
assigns, lenders, and successors-in-interest (together with each of their
respective shareholders, partners, directors, officers, employees, agents,
representatives, successors, and assigns), from and against any suit,
proceeding, claim (including without limitation third party claims for personal
injury or real or personal property damage), action, judgment, fine, penalty,
loss, cost, damage, liability (including without limitation sums paid in
settlement of claims), or expense (including but not limited to investigation
costs and attorneys' and consultants' fees) arising out of, related to, or in
any way connected with Hazardous Materials released, discharged or placed on the
Property on or after the Effective Date by Lessee, or one whose act or omission
occurs in connection with a contractual relationship with the Lessee.
Notwithstanding anything to the contrary in the lease, Lessor shall have no
responsibility for and Lessee for itself and its beneficiaries, heirs, personal
representatives, successors, and assigns hereby waives and releases any and all
claims, actions, suits, proceedings, judgments, losses, costs, personal
injuries, damages, liabilities, deficiencies, fines, penalties, damages,
attorneys' fees, consultants' fees, investigations, detoxifications,
remediations, removals, and expenses of every type and nature.
11. RELEASE BY LESSEE.
Lessee hereby releases Lessor, and Lessor's descendants, dependents,
heirs, executors, administrators, agents, servants, tenants, assigns, lenders
and successors-in-interest (together with each of their respective shareholders,
partners, directors, officers, employees, agents, representatives, successors,
and assigns), from and against any and all claims, demands, obligations, causes
of action, and liability arising out of, related to, or in any way connected
with, Hazardous Materials for which the Lessee is indemnifying Lessor hereunder.
Lessee agrees never to commence, aide in any way or prosecute against Lessor, or
any of his above-referenced successors or assigns, any action or other
proceeding based upon any claims, demands, causes of action, obligations,
damages, or liabilities covered by this release. Lessee further expressly waives
any rights or benefits available to it with respect to this release under the
provisions of Section 1542 of the California Civil Code, which provides:
A general release does not extend to claims which
the creditor does not know or suspect to exist in his
<PAGE> 16
favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.
Lessee has been apprised of and fully understands the statutory language of
Section 1542 of the California Civil Code and, with this understanding, elects
to and does assume all risk for claims, known or unknown, covered by this
release.
12. Survival.
The provisions of this Addendum shall survive the execution of and the
delivery of any other documents or instruments prepared pursuant to this Lease,
shall not merged therein, and shall survive the expiration or early termination
of the Lease.
13. Third Parties. This Addendum does not affect the obligations of the Lessee
to maintain, secure and protect the Premises from the acts of third parties.
Acts of third parties on the Premises, after delivery of possession of the
Premises to Lessee for the construction of the Lessee Improvements and prior to
the expiration or earlier termination of the Lease Term, that cause Hazardous
Materials to be released, discharged or placed on the Premises are the sole
responsibility of the Lessee.
LESSOR:
By: /s/ PATRICK NG
---------------------------------
Patrick Ng, as Trustee
By: /s/ BETTY NG
---------------------------------
Betty Ng, as Trustee
LESSEE:
By: /s/ ISY GOLDWASSER
---------------------------------
Isy Goldwasser
Its
---------------------------------
ENVIRONMENTAL ADDENDUM TO LEASE/NG/SYMYX Page 5
3100 Central Exp/ngindad.crr
<PAGE> 1
EXHIBIT 10.7(a)
FIRST AMENDMENT TO LEASE
This FIRST AMENDMENT TO LEASE ("Amendment") is made and entered into
this 19th day of December, 1996 by and between Patrick and Bette Ng,
Co-Trustees of the Ng Family Trust, dated December 21, 1987 ("Lessor") and
Symyx Technologies, Inc. ("Lessee").
RECITALS
A. Whereas Lessor and Lessee entered into that certain lease
("Lease") dated as of November 15, 1996 with respect to that approximately
32,794 square foot building located at 3100 Central Expressway, Santa Clara
County, Santa Clara, California ("Premises") which Premises form a part of that
land owned by Lessor (collectively "Property"), which Property is further
described in Exhibit A hereto;
B. Whereas Lessee has an option to purchase the Property under
certain conditions contained in the Lease;
C. Whereas Lessor has had difficulty obtaining a subordination and
non-disturbance agreement from San Benito Ranch Co., a California partnership
("San Benito Ranch") which partnership holds a security interest in the
Property as evidenced by that certain Short Form Deed of Trust and Assignment
of Rents dated December 20, 1985 and recorded in the Official Records of Santa
Clara County at Book J555, page 150 ("Deed of Trust") as security for the
repayment of a promissory note with an outstanding balance of approximately One
Million Nine Hundred Thousand Dollars ($1,900,000) (the "Note");
D. Whereas Lessee is concerned that failure to obtain such a
subordination and non-disturbance agreement has a significant and adverse
impact on Lessee's rights under the Lease;
E. Whereas Lessee and Lessor entered into that certain Agreement
executed on the 12th day of December 1996 which Agreement sets forth conditions
precedent to effecting Lessee's obligations under the Lease ("Conditions
Agreement");
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration the receipt of which is hereby acknowledged, Lessor and
Lessee agree that the Lease shall be amended as follows:
1. Abatement of Base Rent: Paragraph 1.5 of the Lease shall be
modified such that Base Rent shall be payable on the first day of each month
commencing July 1, 1998, not February 1, 1997.
2. Replacement of Financing/Subordination and Non-Disturbance
Agreement: Lessor shall, by September 30, 1997, either (1) repay the Note and
Release the Deed of Trust in Order to eliminate the security interest of San
Benito Ranch; or (2) obtain replacement financing from a new lender (which
lender shall agree to execute a Subordination and Non-Disturbance Agreement
substantially in the form attached hereto as Exhibit B), repay the Note and
release the Deed of Trust
<PAGE> 2
in order to eliminate the security interest of San Benito Ranch (subsections (1)
and (2) of this paragraph 2 shall hereinafter be collectively referred to as
"Replacement Financing").
3. Lessee Contribution for Replacement Financing: In the event Lessor
obtains Replacement Financing such that the Note is repaid and the Deed of Trust
reconveyed by September 30, 1997, Lessee agrees to reimburse Lessor for fifty
percent (50%) of Lessor's reasonable costs incurred to obtain the Replacement
Financing ("Replacement Financing Costs"), provided, however, that in no event
shall Lessee's contribution to the Replacement Financing Costs exceed Twenty
Thousand Dollars ($20,000). Lessee agrees to reimburse Lessor for such
Replacement Financing Costs within ten (10) days following receipt by Lessee
from Lessor of an invoice setting forth the Replacement Financing Costs and a
copy of Lessor's canceled check evidencing payment of such invoice.
4. Bank Account for Deed of Trust Payments: In order to insure that
Lessor meets its obligations with respect to amounts due under the Note until
the Replacement Financing is obtained, Lessor shall deposit One Hundred Thirteen
Thousand Four Hundred and Eighty-Four Dollars and 96/00 ($113,474.96) into a
bank account in the name of "Symyx Technologies, Inc. as Trustee for the Ng
Family Trust" ("Trust Account") which amount Lessor hereby represents to be the
sum of all monthly payment amounts due San Benito Ranch under the terms of the
Note from the date hereof to September 30, 1997. The Trust Account shall be an
interest bearing account with the interest paid to Lessor. Beginning February 1,
1997 and ending on the earlier of (1) the date that Lessor repays the Note; or
(2) September 30, 1997, Lessee shall withdraw from the Trust Account, and pay to
San Benito Ranch, the amount of Fourteen Thousand One Hundred Eighty-Four
Dollars and 37/00, which amount shall be sent by Lessee so that it is received
by San Benito Ranch on or before the first business day of each month ("Monthly
Note Payment"). Lessee shall provide to Lessor, on or before the first business
day of each applicable month, a copy of the Monthly Note Payment made to San
Benito Ranch from the Trust Account ("Payment Notice"). If Lessor does not
receive Payment Notice on or before the first business day of a particular
month, Lessor shall have the right to make the Monthly Note Payment for that
month and to obtain reimbursement of such sum so paid from the Trust Account.
Notwithstanding the foregoing, Lessee shall be held harmless from, and shall not
in any way be liable to Lessor or any third party for any claims, damages,
demands, losses, costs and expenses, including attorneys' fees, and any other
losses of any kind or nature, whether direct or indirect, arising as a result of
any breach of, or relating in any way to the Note or Deed of Trust, provided
however, that Lessee shall not be released from liability for any use of the
Trust Account which is in violation of the provisions of this Amendment. Upon
the provision by Lessor of reasonable proof to Lessee that Lessor has obtained
Replacement Financing, paid the Note and released the Deed of Trust as set forth
in paragraph 2 hereof, Lessee shall release any amounts remaining in the Trust
Account shall be released to Lessor.
5. Option to Purchase: If Lessor does not meet the obligations set forth
in paragraph 2 hereof within the time permitted by said paragraph, Lessee shall
have an option to purchase the Property ("Lessee Option") for One Million Nine
Hundred Thousand Dollars ($1,900,000) ("Purchase Price"). As consideration for
the Lessee Option, Lessee shall, upon execution of this Amendment, pay Lessor or
its designees Eighteen Thousand One Hundred Eighteen Dollars and
-2-
<PAGE> 3
65/00 ($18,118.65). In order to exercise the Lessee Option, Lessee must provide
written notice to Lessor of its intent to exercise the Lessee Option ("Lessee
Option Notice") on or before October 10, 1997 ("Option Exercise Date"). If the
Lessee Option Notice is properly provided on or before the Option Exercise
Date, Lessor and Lessee shall proceed to close the purchase and sale of the
Property in accordance with the terms of paragraphs 60(1) through 60(9) of the
Lease. If Lessee fails to provide notice of its intent to exercise the Lessee
Option on or before the Option Exercise Date, the Lessee Option shall
terminate. Termination of this Lessee Option shall not affect any other rights
of Lessee under the Lease, including, but not limited to, any other option
rights to purchase the Property, or any right of first refusal contained
therein. In the event Lessee exercises the Lessee Option, Lessor shall repay the
Note and cause the Deed of Trust to be reconveyed at the closing of the sale of
the Property to Lessee.
6. Further Assurances: Lessor shall execute and deliver such further
instruments and take such further action as may be reasonably requested by
Lessee to effect the purposes of this Amendment.
7. Amendment of Lease: In the event of any inconsistency between
the provisions of this Amendment and the provisions of the Lease, the
provisions of this Amendment shall prevail.
8. Conditions Agreement: Lessor and Lessee agree that the conditions
precedent to effecting Lessee's obligations under the Lease as set forth in the
Conditions Agreement have been satisfied and/or waived by Lessor and Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment, by
their duly-authorized representatives, as of the respective dates set forth
below.
LESSOR:
PATRICK NG AND BETTE NG, CO-TRUSTEES
OF THE NG LIVING TRUST DATED
DECEMBER 21, 1987
By: /s/ PATRICK NG
---------------------------------
Name: Patrick Ng
Date: 12/19/96
---------------------------
By: /s/ BETTE NG
---------------------------------
Name: Bette Ng
Date: 12/19/96
---------------------------
-3-
<PAGE> 4
LESSEE:
SYMYX TECHNOLOGIES, INC.,
A CALIFORNIA CORPORATION
By: /s/ ISY GOLDWASSER
---------------------------------
Name: Isy Goldwasser
Title: Chief Financial Officer
--------------------------
Date: December 19, 1996
--------------------------
-4-
<PAGE> 5
EXHIBIT A
All that certain Real Property in the City of Santa Clara, County of Santa
Clara, State of California, described as follows:
PARCEL ONE:
Parcel 2, as shown on the Parcel Map filed for record September 12, 1975 in the
Office of the County Recorder of Santa Clara County in Book 361 of Maps, at
Pages 25, 26 and 27.
PARCEL TWO:
A non-exclusive easement for ingress and egress over the following described
real property.
A portion of that 2.238 acre parcel shown as Parcel 3 on that Parcel Map filed
for record on September 12, 1975 in Book 361 of Maps, at Pages 25, 26 and 27,
Santa Clara County Records, more particularly described as follows:
A strip of land 12.5 feet wide lying adjacent to and Easterly of the Western
boundary of said Parcel 3. The eastern boundary of said strip being more
particularly described as follows:
Beginning at the most Southwesterly corner of said Parcel 3; thence from said
Point of Beginning along the Western boundary of said Parcel 3, North 0 deg
24'20" West, 30.00 feet to the True Point of Beginning; thence from said True
Point of Beginning continuing along the Western boundary of said Parcel 3,
252.00 feet.
PARCEL THREE:
A non-exclusive easements for ingress and egress over a portion of Parcel 1, as
shown on Parcel Map filed in Book 361 of Maps, at Pages 25, 26 and 27, being
more particularly described as follows:
Easement "A"
Beginning at a point which bears North 00 deg 24'20" West, 31.64 feet from the
Southeast corner of said Parcel 1; thence from said Point of Beginning South 89
deg 17'05" West, 45.00 feet; thence North 00 deg 24'20" West, 131.49 feet;
thence North 44 deg 35'40" East, 35.35 feet; thence South 00 deg 24'20" East,
99.25 feet; thence South 45 deg 24'20" East, 16.97 feet; thence North 89 deg
17'05" East, 8.00 feet to a point in the Eastern boundary of Parcel 1; thence
South 00 deg 24'20" East, 45.00 feet to the Point of Beginning.
Easement "B"
A strip of land 20 feet in width lying Westerly of and being contiguous to a
portion of the Eastern boundary line of said Parcel 1, the Eastern line of said
strip being more particularly described as follows:
Beginning at a point on said Eastern boundary line from which the Southeast
corner of Parcel 1 bears South 00 deg 24'20" East, 152.54 feet; thence from
said Point of Beginning North 00 deg 24'20" West 128.50 feet.
<PAGE> 6
Page 2
PARCEL FOUR:
A non-exclusive easement for ingress and egress over a portion of that 2.238
acre shown as Parcel 3 on that Parcel Map filed for record on September 12, 1975
in Book 361 of Maps, at Pages 25, 26 and 27 Santa Clara County Records, said
easement being more particularly described as follows:
Beginning at the Southwest corner of said Parcel 3; thence along the Westerly
boundary line of said Parcel 3, North 00 deg 24' 20" West, 30.00 feet to the
True Point of Beginning; thence from said True Point of Beginning North 89 deg
17' 05" East, 294.76 feet; thence through a curve to the right tangent to the
last bearing having a central angle of 62 deg 42' 36" and a radius of 20.00 feet
from an arc distance of 21.89 feet to a point on the Southeasterly boundary line
of said Parcel 3; thence along said Southeasterly boundary line North 45 deg
10' 12" East, 44.91 feet to a point in the Westerly right-of-way line of Oakmead
Village Drive as said Drive is shown on the Parcel Map hereinabove referred to;
thence along said Westerly right-of-way through a curve to the right tangent to
other bearing North 29 deg 27' 25" West through a central angle of 02 deg
26' 08" with a radius of 355.00 feet for an arc length of 15.09 feet; thence
leaving said right-of-way line of Oakmead Village Drive South 67 deg 37' 58"
West, 30.53 feet; thence North 68 deg 10' 57" West, 6.41 feet; thence South 89
deg 17' 05" West, 303.37 feet to a point on the Westerly boundary line of said
Parcel 3; thence South 00 deg 24' 20" East along said Westerly line 25.00 feet
to the True Point of Beginning.
PARCEL FIVE:
A non-exclusive easement for ingress and egress to those parcels shown as
Parcels 1, 2 and 4 on that Parcel Map filed for record on September 12, 1975 in
Book 361 of Maps, at Pages 25, 26 and 27 Santa Clara County Records, over the
following described real property:
A portion of that 2.238 acre parcel shown as Parcel 3 on that Parcel Map filed
for record on September 12, 1975 in Book 361 of Maps at Pages 25, 26, 27, Santa
Clara County Records, more particularly described as:
A strip of land 12.5 feet wide the Southeasterly line of which is particularly
described as follows:
Beginning at the Southeasterly corner of said Parcel 3, said corner lying on the
Western line of Oakmead Village Drive; thence South 45 deg 10' 12" West, 45
feet.
PARCEL SIX:
A non-exclusive easement for ingress and egress over a portion of that 1.737
acre parcel shown as Parcel 4 on that Parcel Map filed for record on September
12, 1975 in Book 361 of Maps, at Pages 25, 26 and 27, Santa Clara County
Records, said easement being more particularly described as follows:
A strip of land 12.5 feet wide the Northwesterly line of which is more
particularly described as follows:
Beginning at the most Northerly corner of Parcel 4 herein described; thence
<PAGE> 7
Page 3
South 45 deg 10' 12" West, along the Northwesterly line of said Parcel 4, 45.00
feet to the terminus of the herein described line.
Excepting therefrom that portion of said property lying below a depth of five
hundred (500) feet measured vertically from the contour of the surface thereof
as reserved by Golden Empire Investment Corporation, a Corporation, by Deed
recorded November 3, 1972 in Book 0097 of Official Records, Page 711; provided
however, that said Grantor, its successors and assigns shall not have the right
for any and all purposes to enter above 500 feet, measured vertically from the
contour of the surface of said property.
<PAGE> 8
EXHIBIT B
---------
RECORDING REQUESTED BY AND,
WHEN RECORDED, RETURN TO:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Real Estate Department/MGI
_______________________________________________________________________________
SUBORDINATION NON-DISTURBANCE AND ATTORNMENT AGREEMENT
------------------------------------------------------
THIS AGREEMENT is made as of the ____ day of November, 1996, by and between
_______________, a California Partnership ("Lender"), and Symyx Technologies,
Inc., a California corporation ("Tenant"), with reference to the following
facts:
RECITALS:
A. Lender is the beneficiary under that certain Deed of Trust (the "Deed
of Trust") dated December 20, 1985, by Patrick Ng and Bette Ng, Husband and
Wife, as Joint Tenants in favor of All-California Title Company, as trustee,
recorded December 20, 1985, at Book J555, Page 150, in the Official Records of
Santa Clara County, California, which Deed of Trust encumbers that certain
improved real property (the "Property") commonly known as 3100 Central
Expressway, Santa Clara, Santa Clara County, California, as more particularly
described on Exhibit "A" attached hereto and made a part hereof.
B. Tenant is the tenant under that certain Lease dated ________________,
1996, between Patrick and Bette Ng, Trustees for the Ng Family Trust, as
landlord, and Tenant, regarding the Property.
C. Tenant has agreed to subordinate its interest under the Lease to the
interest of Lender under the Deed of Trust and to attorn to Lender on the terms
and conditions described herein. As an inducement to Tenant to execute and
deliver this Agreement, Lender has agreed not to disturb Tenant's use,
possession and enjoyment of the Property, and not to disturb Tenant's right to
purchase the Property, as provided herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
<PAGE> 9
AGREEMENT
1. Lender hereby consents to and ratifies the execution, delivery and
performance of the Lease. So long as Lender is not in default under this
Agreement, all of the right, title and interest of Tenant in, under and to the
Lease and the Property shall be and remain at all times subject and subordinate
to the Deed of Trust and to all renewals, modifications, replacements,
consolidations and extensions thereof and to any and all advances made
thereunder and all interest thereon.
2. In the event Lender or any other purchaser at a foreclosure sale or
sale under private power contained in the Deed of Trust becomes the owner of the
Property by reason of any foreclosure of the Deed of Trust or the acceptance of
a deed in lieu of foreclosure, then, so long as Lender is not in default under
this Agreement, Tenant shall be bound to Lender or such other purchaser under
all of the terms, covenants and conditions of the Lease for the remaining
balance of the term thereof and any extensions thereof, with the same force and
effect as if Lender or such other purchaser had been the original landlord under
the Lease. Tenant hereby covenants to attorn to Lender or such other purchaser
as its landlord and that such attornment shall be effective and self-operative
without the execution of any further instruments on the part of any of the
parties to this Agreement.
3. So long as no default by Tenant exists under the Lease (beyond any
period available to cure such default), Lender or such other purchaser shall
recognize and shall not disturb the leasehold estate of Tenant under all of the
terms, covenants and conditions of the Lease for the remaining balance of the
term and any extensions thereof with the same force and effect as if Lender or
such other purchaser were the original landlord under the Lease. Without
limiting the generality of the foregoing sentence, (i) Tenant's use and
possession of the Property and Tenant's rights and privileges (including,
without limitation, all extension options and rights, including rights to
purchase) under the Lease and any extensions thereof shall not be disturbed,
diminished or interfered with by Lender in the exercise of any of its rights
under the Deed of Trust or by any succeeding owner of the Property as a result
of the exercise by Lender of any such rights, (ii) the Lease shall not be
terminated or modified by the exercise of any Lender's rights under the Deed of
Trust or by any succeeding owner of the Property as a result of the exercise by
Lender of any such rights, and (iii) Lender will not join Tenant as a party
defendant in any action or proceeding for the purpose of terminating or
modifying Tenant's interest and estate under the Lease because of any default
under the Deed of Trust or any other instrument evidencing or securing the
indebtedness secured thereby. Notwithstanding anything to the contrary in the
Deed of Trust, (a) Lender shall make all insurance proceeds and condemnation
awards received by it available for repair and restoration of the Property to
the extent necessary for Landlord and Tenant to fulfill their repair and
restoration obligations under the Lease, and (b) any and all insurance and
condemnation proceeds payable with respect to Tenant's property or the
interruption or relocation of Tenant's business will be paid to Tenant.
4. This Agreement shall be binding upon the undersigned and their
respective heirs, successors, successors-in-interest and assigns and will inure
to the benefit of all persons and
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entities now or hereafter having any right, title or interest in, under or to
the Deed of Trust and the Lease.
IN WITNESS WHEREOF, the undersigned have executed this Subordination,
Non-Disturbance and Attornment Agreement, by their duly-authorized signatories,
as of the day and year first above written.
TENANT:
Symyx Technologies, Inc., a California corporation
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
LENDER:
_________________________________________________
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
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<PAGE> 11
STATE OF CALIFORNIA
COUNTY OF ________________
On ______________, 199___, before me ____________________________, a
Notary Public in and for the County and State aforesaid, personally appeared
________________, who is personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity and that by his/her signature on such instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS, my hand and official seal.
_____________________________
Signature
______________________________________________________________________________
STATE OF CALIFORNIA
COUNTY OF _______________________
On ______________, 199___, before me ____________________________, a
Notary Public in and for the County and State aforesaid, personally appeared
________________, who is personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity and that by his/her signature on such instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS, my hand and official seal.
_____________________________
Signature
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<PAGE> 1
EXHIBIT 10.8
COLLABORATION AGREEMENT
This COLLABORATION AGREEMENT (the "Agreement"), effective as of March 1, 1998
(the "Effective Date"), is made by and between Symyx Technologies, a California
corporation, having a principal place of business at 3100 Central Expressway,
Santa Clara, California 95051 ("Symyx"), and Bayer AG, a German corporation,
having a principal place of business at D-51368 Leverkusen, Germany (the
principal contributor and participant within Bayer) and its Affiliates
(collectively, "Bayer").
BACKGROUND
A. Symyx owns and is developing novel, proprietary methods for the
combinatorial preparation and screening of novel materials;
B. Bayer is a worldwide-represented German chemical and pharmaceutical
corporation with diversified business units across multiple industry
segments and interests in actively developing and utilizing novel
technologies and materials;
C. Symyx and Bayer desire to collaborate to conduct materials discovery
research and development focused on [******], as well as such additional
materials and activities as may be agreed upon by the parties;
D. Symyx and Bayer have entered into that certain Interim Research Funding
Agreement effective as of September 1, 1997, as amended by that certain
Amendment to Interim Research Funding Agreement effective as of December
1, 1997 (as amended, the "Interim Research Funding Agreement"); and
E. [******]
NOW, THEREFORE, for and in consideration of the covenants, conditions
and undertakings set forth herein, it is agreed by and between the parties as
follows:
ARTICLE 1
DEFINITIONS
As used herein, the terms in this Agreement shall have the meanings set
forth in Exhibit A.
ARTICLE 2
RESEARCH PROGRAM
2.1 Research Activities. Subject to the terms and conditions set forth
herein, the parties shall conduct collaborative research in connection with the
Research Program. The parties intend to conduct the Research Program on a
collaborative basis, and agree to cooperate in the identification of Lead
Compounds.
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2.1.1 Symyx Responsibilities. During the term of the Research
Program, Symyx shall use its reasonable efforts to identify Lead Compounds in
accordance with applicable Project Plans and, in that regard, to prepare and
screen Libraries in the Research Program, one or more of which Libraries may, in
Symyx's discretion, be prepared by Symyx outside the Research Program but used
for screening in the course of performing the Research Program. Symyx shall keep
the RFC responsible for a particular Field fully informed of its activities in
respect of each Project within such Field. Notwithstanding any other provision
of this Agreement, Symyx shall not, without its consent, be required to perform
research activities other than in accordance with the Project Plans, or utilize
a total number of Symyx Full-Time Equivalent ("FTE") research positions in
excess of the number of FTE's funded in the Research Expenses and paid for by
Bayer.
2.1.2 Bayer Responsibilities. During the term of the Agreement,
Bayer shall use its reasonable efforts to (i) provide Symyx with background
information and technical information available to Bayer that is necessary to
Symyx in setting up and conducting the Projects within the Research Program, and
(ii) provide other support and assistance necessary for the conduct of the
Research Program as set forth in the Project Plans or as mutually agreed by the
parties, including but not limited to providing chemical reagents,
characterization protocols, and other relevant information for the conduct of
the Research Program. Bayer shall keep Symyx fully informed of Bayer's testing
and development of Agreement Compounds and/or Program Technology, during the
term of the Research Program, Bayer shall keep the RFC responsible for each
Project apprised of the progress and technical issues relating to the
development of Agreement Compounds and commercialization of Products, or
commercial exploitation of Program Technology, resulting from such Project.
2.1.3 Interim Research. It is understood and agreed that
research activities performed under the Interim Agreement shall be considered to
be work performed in the Research Program for all purposes of this Agreement,
including without limitation royalty obligations set forth herein; provided,
however, that payments made from Bayer to Symyx under the Interim Research
Funding Agreement shall not offset or reduce the payments provided under Article
6 of this Agreement.
2.2 Fields and Projects.
2.2.1 Initial Fields. The Research Program shall initially
include the following Fields: [******].
(a) Addition of [******] Field. Upon written agreement
of the parties, including approval [******], on or before May 1, 1998 setting
forth mutually agreeable terms which may include amendments to sections of this
Agreement, the Research Program may be expanded to include the [******] Field,
which shall be defined as [******]. It is understood that upon addition of the
[******] Field to the Research Program, Symyx will dedicate [******] FTEs to
research activities in the [******] Field during the period from May 1, 1998 to
March 1, 1999, and will dedicate [******] FTEs to research activities in the
[******] Field during the period from March 1, 1999 to March 1, 2000.
(b) Bayer Election to Reduce [******] Field. In the
event that the
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Research Program has not been expanded to include one or more Projects
concerning [******] (including without limitation the Projects described in
Section 2.3) on or before June 1, 1998, then Bayer may elect to reduce the
number of Symyx FTEs within the [******] Field from [******] FTEs to [******]
FTEs for the period from the effective date of such reduction to March 1, 1999,
and from [******] FTEs to [******] FTEs for the period from March 1, 1999 to
March 1, 2000. In the event that Bayer so elects to reduce the [******] Field,
(i) the funding payments from Bayer to Symyx will be reduced as set forth in
Section 6.2.1(a), and (ii) Symyx shall not be obligated to utilize more than an
average of [******]) FTEs per year in the [******] Field from the effective date
of such election to March 1, 1999 and [******] FTEs per year in the [******]
Field from March 1, 1999 to March 1, 2000.
2.2.2 Addition and Expansion of Fields. Upon mutual written
agreement of the parties, the Initial Fields may be expanded to include
additional Projects or the Research Program may be expanded to include one or
more additional Fields. In conjunction with expansion of the Research Program to
include a new Field, it is understood that the parties will need to reach
agreement regarding the description or definition of the Field, funding for
research in the Field, identification of one or more Projects to be conducted
within the Field, and the term of such Projects, among other things. It is
understood that the parties may agree to reallocate or rebudget resources when
the parties agree to add a new Field or Project to the Research Program, and
that if the parties agree to such reallocation, the addition of a new Field or
Project will not necessarily require an increase in total funding from Bayer.
2.2.3 Projects; Project Plans. A brief description of the
initial Projects in each Field and the Project Plans for each of these initial
Projects have been agreed in writing prior to the Effective Date.
2.2.4 Identification of Lead Compounds. The procedure for the
identification of Lead Compounds by Symyx is set forth on Exhibit B hereto.
2.2.5 Termination of Fields. Fields may be terminated by
unanimous agreement of the Executive Committee. The RFC for a particular Field
may recommend to the Executive Committee that the research activities with
respect to such Field should be terminated. At the request of either party, the
Executive Committee will discuss possible reallocation of resources consistent
with maintained funding by Bayer at the levels set forth in Section 6.2.1;
provided, it is understood that if the Executive Committee does not agree upon
such reallocation and still terminates a Field, the funding payments from Bayer
to Symyx will decrease proportionally to the number of FTE's no longer being
used for such Field. The parties will attempt to implement a smooth transition
in connection with any such termination or reallocation, including provision of
reasonable resources and time frames for wind-down or scale-back of the Project
in such Field.
2.3 [******]
2.4 Research Program Term.
2.4.1 [******]
2.4.2 Extension of Research Program Term. Both parties intend to
identify and
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propose additional Projects (including appropriate product driven targets) that
will justify the extension of the Research Program, and agree that not less than
six (6) months before expiration of the Initial Research Term and any Extended
Research Term, the Executive Committee will meet to discuss possible Projects
for extension of the Research Program. Upon written agreement of the parties,
the Research Program Term may be extended up to three (3) years (the "Extended
Research Term"). Except as the parties may otherwise agree, the funding for the
Extended Research Term, if any, shall be not less than [******] from March 1,
2000 to February 28, 2001, not less than [******] from March 1, 2001 to February
28, 2002, and not less [******] from March 1, 2002 to February 28, 2003.
2.5 Field Exclusivity. Subject to Bayer's continuing payment to Symyx of
Research Expenses for a Field, Symyx will not conduct research in such Field for
any third party or on its own behalf, during the Research Program Term, other
than under this Agreement. During the period for which Bayer originally
committed to make Research Funding Payments for a given Field (as set forth in
this Agreement for Initial Fields and as agreed by the parties for any
additional Fields), Symyx will give Bayer thirty (30) days written notice in the
event exclusivity set forth in this Section 2.5 no longer applies for such Field
due to Bayer discontinuing payment, and on request of Bayer, the parties will
discuss what payments, if any, are needed to maintain exclusivity; provided,
however, that Symyx shall not be required to provide such notice to Bayer if the
parties have agreed in writing that the exclusivity set forth in this Section
2.5 no longer applies for such Field.
2.6 [******]
2.7 Records. Symyx and Bayer shall maintain records of the Research
Program (or cause such records to be maintained) in sufficient detail and in
good scientific manner as will properly reflect all work done and results
achieved in the performance of the Research Program (including information
sufficient to establish dates of conception and reduction to practice of
inventions).
2.8 Activities Following Research Program. Except as expressly provided
otherwise under the terms of this Agreement, Bayer shall, at Bayer's or its
Sublicensees' expense, be responsible for conducting all development of
Agreement Compounds and Products within the Field following the completion of
the Research Program and all commercialization of Products in the Field to which
Bayer retains rights under this Agreement, and, subject to and in accordance
with the licenses, rights and obligations set forth in this Agreement, Bayer
shall have the right in its exclusive discretion to conduct such development and
commercialization.
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ARTICLE 3
MANAGEMENT AND INFORMATION
3.1 Executive Committee.
3.1.1 Responsibility. Symyx and Bayer shall establish a
committee (the "Executive Committee") to (i) oversee and to direct the overall
relationship between Symyx and Bayer, (ii) add, modify and terminate Fields and
Projects within such Fields, (iii) approve budgets for conduct of the Research
Program, (iv) identify and recommend additional fields for potential expansion
or extension of the Research Program, and (v) resolve any issues which a
Research Field Committee is unable or not authorized to resolve, and (vi) review
and modify as necessary the Lead Compound identification and approval process.
3.1.2 Membership. The Executive Committee shall be comprised of
three (3) representatives from each party, with each party's representatives
selected by the party. Either party may replace their respective Executive
Committee members at any time, upon written notice to the other party. It is
understood that Bayer's representatives on the Executive Committee may include
one representative from Central Research and each business group and Affiliate
of Bayer participating in a Project, up to a total of three (3) persons.
3.1.3 Meetings. The Executive Committee shall meet at least
twice per year at locations agreed by the parties, or more frequently as decided
by the Executive Committee. With the consent of the parties, other
representatives of Symyx or Bayer may attend Executive Committee meetings as
nonvoting observers. Each party shall be responsible for all of its own expenses
associated with attendance of such meetings. Executive Committee members may
participate in any such meeting in person, by telephone, or by televideo
conference. Symyx shall prepare minutes of each Executive Committee meeting,
which minutes shall be approved and signed by Executive Committee
representatives of each party.
3.1.4 Decision Making. Decisions of the Executive Committee
shall be made by unanimous approval. In the event the Executive Committee is
unable to resolve an issue, it will be referred to the responsible
representative of the Board of Directors of Bayer and the Chairman of the Board
of Symyx for resolution, and such persons shall discuss such matter within
thirty (30) days.
3.1.5 Additional Fields and Projects. The Executive Committee
shall consider and evaluate proposed additional fields and projects for the
potential expansion or extension of the Research Program proposed by
representatives of either party. If the Executive Committee determines that the
addition of a given field or Project or extension of an existing Field is
appropriate and desirable, the Executive Committee will recommend such
additional field or project, or such extension of a Field, to the parties and
the parties will negotiate in good faith the terms and conditions upon which
such additional field or Project may be added or extended; however, it is
understood that neither party shall be obligated to agree to or accept such
terms and conditions. It is understood that Symyx shall not be obligated to
perform any additional research activities without its prior consent.
3.2 Research Field Committees.
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3.2.1 Responsibilities. Bayer and Symyx will establish a
committee for each Field to oversee and review the technical direction of
research activities within a Field (the "Research Field Committee," or "RFC").
The responsibilities of each Research Field Committee shall include: (i)
establishing and modifying the Lead Criteria for each Project in the applicable
Field, (ii) determining whether a particular compound identified in a Project in
that Field meets the Lead Criteria, in accordance with the procedure set forth
in Exhibit B to this Agreement, (iii) defining the activities and milestones for
each Project in the Field, (iv) monitoring and reporting research progress for
the Field for which it is responsible, and ensuring open exchange between both
parties, (v) preparing and prioritizing lists of potential additional Projects
for the Field, (vi) evaluating results of Projects in the Field and potential
modifications to Project Plans, (vii) making recommendations regarding the
approval of budgets for Projects in the Field, and (viii) coordinating all
patent activities arising from Projects in the Field. From time to time, a RFC
may invite additional non-voting experts and establish subcommittees, such as a
patent committee, to oversee particular tasks or activities. The RFC may, by
unanimous agreement, amend the Project Plans of Projects within the applicable
Field, provided, however, that the RFC shall not alter the funding for any
Project without the prior agreement of the Executive Committee.
3.2.2 Membership. Each RFC shall include an equal number of
representatives from Bayer and Symyx, up to three (3) persons from each, each
party's representatives selected by that party. The parties will each designate
one of their own representatives as the leader of their representatives on the
RFC to help coordinate activities of the RFC. Symyx and Bayer may each replace
its RFC representatives and leaders at any time, upon written notice to the
other party. Each RFC shall be chaired as agreed by the parties.
3.2.3 Meetings. During the term of the applicable Project, each
RFC shall meet quarterly at regular intervals, or more frequently as agreed by
the RFC, at such locations as the parties agree. With the consent of the
parties, other representatives of Symyx or Bayer may attend RFC meetings as
nonvoting observers. Each party shall be responsible for all of its own expenses
associated with attendance of such meetings. RFC members may participate in any
such meeting in person, by telephone, or by televideo conference. Symyx shall
prepare minutes of each RFC meeting, which minutes shall be approved and signed
by RFC representatives of each party, and will prepare a list of action items
determined by the RFC in each formal meeting for submission to the Executive
Committee.
3.2.4 Decision Making. Decisions of each RFC shall be made by
unanimous approval. In the event that unanimous agreement on any matter is not
achieved within the RFC, the matter will be referred to the Executive Committee
for resolution.
ARTICLE 4
INTELLECTUAL PROPERTY
4.1 Program Technology. Subject to 4.3, title to all inventions and
other intellectual property made by employees or agents of Bayer and Symyx in
the course of and in connection with the Research Program shall be deemed owned
jointly by Symyx and Bayer, excluding
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Combinatorial Chemistry Technology. It is understood that, except as otherwise
expressly provided in this Agreement, both Bayer and Symyx may use, sublicense,
commercialize, or otherwise exploit all such jointly-owned technology without
the consent of, or obligation to account to, the other party.
4.2 Law. Inventorship of inventions and other intellectual property
rights conceived and/or reduced to practice pursuant to this Agreement shall be
determined in accordance with applicable law in the country where the invention
is made, subject to the express provisions of this Agreement regarding rights of
ownership and grant of licenses.
4.3 Combinatorial Chemistry Technology. Symyx shall retain sole
ownership of, and all rights to, Combinatorial Chemistry Technology, and any
inventions or discoveries conceived or reduced to practice or otherwise
developed by Symyx and/or Bayer relating to Combinatorial Chemistry Technology,
developed in connection with the conduct of the Research Program.
4.4 Reserved Rights. Symyx shall not have any right to combinatorial
technologies developed by Bayer outside the Research Program, and Bayer shall
not have any obligation to disclose the same to Symyx. Bayer shall not have any
right in or to any Combinatorial Chemistry Technology or to Symyx Technology or
any intellectual property developed by Symyx outside the Research Program,
except as expressly set forth in this Agreement, and Symyx shall not have any
obligation to disclose the same to Bayer.
4.5 Notice of Inventions. Symyx and Bayer shall promptly report to the
RFC of each Field any inventions relating to Lead Compounds or Program
Technology or Combinatorial Chemistry Technology made in the course of
performing the Research Program.
4.6 Cooperation. Each of Bayer and Symyx shall keep the other informed
as to the status of patent and patent prosecution matters defined in this
Article 4, including without limitation, by providing the other the opportunity
to fully review and comment on any documents as far in advance as possible of
filing dates and prosecution deadlines, and providing the other copies of any
substantive documents that such party receives from such patent offices promptly
after receipt, including notice of all official actions, interferences,
reissues, re-examinations, oppositions, potential litigation, or requests for
patent term extensions. Bayer and Symyx shall each reasonably cooperate with and
assist the other at its own expense in connection with such activities, at the
other party's request.
4.7 Patent Prosecution.
4.7.1 Patent Committee. The Executive Committee may establish a
committee (the "Patent Committee") to facilitate the filing, prosecution, and
maintenance of patent applications and patents within the Program Technology.
The Patent Committee shall be comprised of an equal number of representatives
from each party, and each party shall designate one person to serve as the
Patent Committee Leader for that party. The Patent Committee shall be
responsible to discuss issues of patent strategy, including without limitation,
issues of where to file patent applications, whether to abandon patent
applications, and how the costs of such prosecution and maintenance will be
funded. The Patent Committee shall also endeavor to open and facilitate
appropriate lines of communication between the parties, the Executive Committee,
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and the RFC's regarding the filing, prosecution, and maintenance of patent
applications and patents within the Program Technology. Decisions of the Patent
Committee shall be made by unanimous approval. In the event the Patent Committee
cannot resolve an issue by unanimous agreement, the matter will be referred to
the Executive Committee for resolution.
4.7.2 Responsibilities.
(a) Inventions by Symyx. Except as provided in Section 4.7.3,
Symyx shall, in its discretion, be responsible for preparing, filing,
prosecuting and maintaining patent applications and patents relating to
inventions within the Program Technology made by employees or agents of Symyx,
but not Bayer, in the course of performing the Research Program, and conducting
any interferences, re-examinations, reissues and oppositions relating to such
patent applications and patents, as it deems appropriate, at Symyx's expense.
(b) Inventions Made Jointly.
(i) The parties will cooperate to file, prosecute and
maintain patent applications covering inventions with the Program Technology
made jointly by employees or agents of Bayer and employees or agents of Symyx in
countries agreed by the parties. The parties shall agree which parties shall be
responsible for conducting such activities with respect each such invention.
Except as otherwise expressly provided in this Agreement, the parties will share
equally all expenses and fees associated with the filing, prosecution, issuance
and maintenance of any patent application and resulting patent for each such
invention in the agreed countries.
(ii) In the event that either party wishes to seek
patent protection with respect to any inventions with the Program Technology
made jointly by employees or agents of Bayer and employees or agents of Symyx in
a country the other is not interested in pursuing patent protection, it shall
notify the other party hereto. If the other party wishes to seek patent
protection with respect to such a jointly-made invention in such country or
countries, it may file, prosecute and maintain patent applications and patents
with respect thereto, at its own expense.
(c) Inventions by Bayer. Bayer shall, in its discretion, be
responsible for preparing, filing, prosecuting and maintaining worldwide in such
countries it deems appropriate, patent applications and patents relating to all
inventions within the Program Technology made by employees or agents of Bayer,
but not Symyx, in the course of performing the Research Program, and conducting
any interferences, re-examinations, reissues and oppositions relating thereto as
it deems appropriate, at Bayer's expense.
4.7.3 Symyx Election Not to Prosecute; Bayer Right to Prosecute.
(a) Symyx Election. In the event that Symyx desires to
discontinue prosecution of a patent application filed by Symyx (or filed jointly
by Symyx and Bayer) pursuant to Section 4.7.2(a) or 4.7.2(b), or desires not to
file or conduct any further activities with respect to a patent application or
patent subject to such sections, Symyx shall notify the Patent Committee or
Executive Committee, and the parties will discuss the appropriate means to
proceed with respect to such patent or patent application. In the event the
Patent Committee, the
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Executive Committee, and the management of the parties cannot within sixty (60)
days determine an appropriate means to proceed with respect to such patent or
patent application, that is mutually agreeable to the parties, then Symyx may
elect upon sixty (60) days prior notice to discontinue prosecution of any patent
applications filed by Symyx pursuant to Section 4.7.2(a) above and/or not to
file or conduct any further activities with respect to the patent applications
or patents subject to such Section.
(b) Bayer Prosecution. In the event Symyx declines to
file or, or having filed, fails to further prosecute or maintain any patent
applications or patents as described in Section 4.7.3(a), or declines or fails
to conduct any proceedings including, but not limited to, interferences,
re-examinations, reissues, oppositions relating thereto, then, subject to
Symyx's agreements with third parties, Bayer shall have the right to prepare,
file, prosecute and maintain such patent applications and patents in such
countries worldwide it deems appropriate, and conduct such proceedings at its
sole expense, and shall consult with Symyx in connection with all such
activities. In such case, Symyx shall immediately execute all necessary
documents that may be required in order to enable Bayer to file, prosecute and
maintain such patent application and to conduct any such proceedings. If such
patent or patent application is filed, prosecuted or maintained by Bayer and if
Bayer sells Products the manufacture, use, or sale of which is covered by such
patent and no other patent within the Program Technology in the country where
such Products are made or sold, then Bayer may credit its costs and expenses in
filing, prosecuting, or maintaining such patent or patent application
("Expenses") against royalties owed to Symyx for such Product under this
Agreement as follows: for patents and patent applications under Section 4.7.2(a)
[******] percent ([******] %) of such Expenses, and for patents and patent
applications under Section 4.7.2(b) [******] percent ([******] %) of such
Expenses; provided, however, that the royalties paid to Bayer shall not be so
reduced any given quarter to less than [******] percent ([******] %) of the
amount that would otherwise be due to Symyx. Nothing in this Section 4.7.3 shall
affect the ownership rights set forth in this Article 4 or the licenses granted
by the parties in Article 5 of this Agreement.
4.8 Copies. Bayer shall promptly provide to Symyx and the Patent
Committee a copy of any patent applications filed by Bayer and its Affiliates
which are Sublicensees after the publication thereof during the term of this
Agreement with respect to any Program Technology, including without limitation,
Agreement Compounds. Symyx shall promptly provide to Bayer and the Patent
Committee a copy of any patent applications filed by Symyx after the publication
thereof during the term of this Agreement relating to any Program Technology,
including without limitation, Agreement Compounds.
4.9 Enforcement and Defense.
4.9.1 Enforcement. Each party shall promptly notify the other of
its knowledge of any potential infringement of the Program Technology by a third
party.
(a) If such infringement relates to a Product subject to this
Agreement, the parties shall be entitled to jointly bring legal action necessary
to enforce patents claiming inventions within the Program Technology for use in
the Field. The EC will discuss whether to jointly bring action to abate such
infringement. If the parties agree to jointly bring action to abate such
infringement, the parties shall share the expenses (including without limitation
attorneys'
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and expert fees) incurred in connection with such action, with Symyx paying
[******] of such expenses and Bayer paying [******] of such expenses. Any
recovery by the parties in any such action shall be shared as follows: first,
each party shall recover its expenses incurred in such action, and then the
remainder shall be shared by the parties with Bayer receiving [******] of such
amount and Symyx receiving [******] of such amount.
(b) If either party notifies the other that it does not wish to
take legal action against an infringement described in Section 4.9.1(a), or if
the parties do not within six (6) months of the date they both have knowledge of
the potential infringement agree to jointly take legal action, then either party
shall have the right, but not the obligation, to independently take such action
to abate such infringement at its own expense. If Symyx independently brings
such action, Symyx shall control and be responsible for all expenses incurred in
connection with such action and may retain all recoveries related to such
action. If Bayer independently takes such action and Symyx does not take such
action, then Bayer will have the right to choose to: (i) not offset any
reasonable expenses incurred in connection with such action against royalties
due Symyx with respect to a Product which utilizes the infringed patent in the
affected country, or (ii) offset [******] of the reasonable expenses incurred in
connection with such action against royalties due Symyx with respect to a
Product which utilizes the infringed patent in the affected country, up to
[******] of such royalties due in any year. In the event Bayer elects not to
offset expenses as described in this Section 4.9.1(b)(i) above, Bayer will
retain all recoveries related to such action. In the event Bayer elects to
offset expenses as described in this Section 4.9.1(b)(ii), any recovery by Bayer
in such action shall be divided as follows: first, Bayer shall recover its
reasonable expenses incurred in such an action, second, Bayer shall reimburse
Symyx for any royalties for which Bayer took an offset, and third, Bayer may
retain [******] of any remainder and shall pay to Symyx [******] of such
remainder.
(c) If there is an infringement which does not relate to a
Product of a patent covering a joint invention within the Program Technology,
the parties shall discuss whether to jointly bring an action to abate such
infringement. In the event that the parties do not wish to jointly bring such an
action either party may seek to abate such infringement; provided, in such
event, should the alleged third party infringer assert that one or more of the
parties to this Agreement are necessary or indispensable to such proceedings,
the other party hereto agrees to join in and participate in such proceedings, at
the expense of and to the extent requested by the party initially participating
in such suit.
4.9.2 Infringement Claims. If the manufacture, sale or use of
any Product pursuant to this Agreement because of the practice of the Program
Technology or the Bayer Technology results in any claim, suit or proceeding
alleging patent infringement against Symyx or Bayer (or its Sublicensees), such
party shall promptly notify the other party hereto in writing setting forth the
facts of such claims in reasonable detail. The Patent Committee or EC will
discuss whether the parties should work together in responding to such action.
Except as the parties may otherwise agree, the defendant shall have the
exclusive right and obligation to defend and control the defense of any such
claim, suit or proceeding, at its own expense, using counsel of its own choice;
provided, however, it shall not enter into any settlement which admits or
concedes that any aspect of the Bayer Technology (in the case of Symyx) and the
Program Technology (in the case of Bayer) is invalid or unenforceable, without
the prior written consent of such other party. The defendant shall keep the
other party hereto reasonably informed of all
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material developments in connection with any such claim, suit or proceeding.
Each party agrees that it will provide reasonable assistance and cooperation if
the other party is a defendant in such an action, including reasonable access to
documents, records, and witnesses at the defendant's expense. In the event Bayer
disagrees Bayer Technology (in the case of Symyx) or Symyx disagrees the Program
Technology (in the case of Bayer) is invalid or unenforceable, the parties shall
meet to discuss and reach agreement. In the event agreement on this matter is
not achieved within fifteen (15) days, the matter will be referred to the Chief
Executive Officer of Symyx and the head of the corresponding Bayer business unit
for resolution.
ARTICLE 5
LICENSES
5.1 Program Technology.
5.1.1 Bayer Field License. Subject to the terms and conditions
of this Agreement, Symyx agrees to grant and hereby grants to Bayer an
exclusive, worldwide, royalty-bearing license, with the right to sublicense,
under Symyx's interest in the Program Technology solely to develop, make, have
made, import, use, offer for sale, and sell Products for use in the applicable
Field.
5.1.2 Bayer Out of Field License. Symyx agrees to grant and
hereby grants to Bayer an exclusive, worldwide, royalty-free license, with the
right to sublicense, under Symyx's interest in Program Technology which was
invented solely by Bayer employees and agents, to use such Program Technology
outside of the Field and to develop, make, have made, import, use, offer for
sale, and sell products other than for use in the applicable Field.
5.1.3 Symyx Out of Field License. Bayer agrees to grant and
hereby grants to Symyx an exclusive, worldwide, royalty-free license, with the
right to sublicense, under Bayer's interest in Program Technology which was
invented solely or jointly by Symyx employees and agents, to use such Program
Technology outside of the Field and to develop, make, have made, import, use,
offer for sale, and sell products other than for use in the applicable Field.
5.2 Bayer Right of First Negotiation. Subject to Symyx's obligations to
third parties, Bayer will have on a right of first negotiation to negotiate with
Symyx to acquire an exclusive, worldwide, royalty-bearing license under Symyx's
interest in Program Technology, with the right to sublicense, to develop, make,
have made, import, use, offer for sale and sell products other than Products, as
follows: (i) Symyx will provide notice if it wishes to pursue a particular
product using Program Technology solely or jointly invented by Symyx employees,
and in such event within sixty (60) days the parties shall commence
negotiations; (ii) such negotiations shall continue for six (6) months from the
date of such notice, or such longer period as the parties may agree; (iii) if
Symyx and Bayer do not reach agreement within such six (6) months period, or
such longer period as the parties may agree, Symyx may develop or commercialize
such products (other than Products) with a third party or pursue such product
itself without obligation to Bayer.
5.3 Sublicenses. Subject to the terms and conditions of this Agreement
Bayer shall have the right to sublicense the rights granted in Sections 5.1.1.,
5.1.2 and 5.4 to third parties,
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including Affiliates of Bayer; provided that the terms of each such sublicense
are consistent with the terms of this Agreement. It is understood that any such
sublicense shall be subject and subordinate to the terms and conditions of this
Agreement, and that Bayer shall remain responsible for all applicable financial
and other obligations under this Agreement for each such Sublicensee, including
without limitation royalty payments due to Symyx hereunder with respect to sales
of Products by any such Sublicensee. Bayer shall provide to Symyx at least the
following information with respect to each of Bayer's sublicensees: (i) the
identity of each sublicensee, and (ii) a description of the rights granted
including scope as to both subject matter and territory.
5.4 Symyx Technology. In the event that any patent rights within Symyx
Technology are necessary for the development and manufacture or
commercialization of a Product to which Bayer has a license pursuant to Section
5.1, Symyx will grant to Bayer a non-exclusive, worldwide royalty-free license,
with the right to sublicense, under patent rights within Symyx Technology as of
the Effective Date, solely to make, have made, import, use, offer for sale and
sell such Product, in each case solely to the extent that Symyx has the right to
grant such rights and solely to the extent that such license is necessary to
enable Bayer or its sublicensee to exercise the rights granted in the licenses
described in Section 5.1.
5.5 Bayer Technology. Bayer agrees to grant, and hereby grants, to Symyx
a nonexclusive, royalty-free license under the Bayer Technology to conduct the
research activities in the Research Program. Notwithstanding Section 5.1 above,
Symyx shall retain the right under the Program Technology to make, have made and
use Agreement Compounds for its own research purposes (i.e., to develop, improve
and validate its technology and intellectual property).
5.6 Access to Combinatorial Chemistry. It is understood that Bayer and
Symyx may, in the future, be interested in entering into an agreement on
mutually agreeable terms and conditions whereby Bayer may obtain access to part
of Symyx's Combinatorial Chemistry Technology. If Bayer desires to acquire
access to part of the Combinatorial Chemistry Technology, Bayer may give Symyx
written notice thereof. If Symyx is willing to grant, and has the right to
grant, Bayer access to such technology, both parties will negotiate in good
faith to try to determine mutually agreeable terms of an agreement whereby Bayer
may obtain a non-exclusive royalty-bearing license to such part of the
Combinatorial Chemistry Technology; however, it is understood that nothing
herein shall obligate either party to negotiate, or enter into, such an
agreement. It is understood that unless and until Symyx and Bayer enter into a
written agreement granting such rights to Bayer, Symyx shall have the right, at
any time and in its sole discretion, to develop, commercialize, sublicense to
third parties (on an exclusive or nonexclusive basis), assign to third parties,
or otherwise exploit Combinatorial Chemistry Technology without obligation to
Bayer.
5.7 Permitted Uses. Except as otherwise agreed in writing, neither Bayer
nor its Affiliates nor Sublicensees shall develop or commercialize any Agreement
Compound or Product except pursuant to the licenses set forth in Section 5.1.1
and 5.1.2 of this Agreement.
5.8 No Conflict. During the term of this Agreement, Symyx shall not
grant any license which Symyx, at the time, knows conflicts with the rights
granted to Bayer in Sections 5.1.1, 5.1.2, 5.2 and 5.4.
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5.9 Third Party Rights. It is understood that Symyx is in the business
of conducting research and development with third parties, and that Symyx will
grant such third parties rights after the Effective Date to acquire licenses for
compounds derived from libraries similar to Bayer's rights under this Article 5.
It is understood and agreed that, even if Symyx complies with its obligations
under this Agreement, compounds provided to third parties in the course of
Symyx's other business activities may result in third party patent applications
and patents, including patent applications and patents owned by such third
parties, or owned jointly by Symyx and such third parties, which could conflict
with patent applications and patents owned by Bayer, or jointly owned by Bayer
and Symyx hereunder. In such event, Symyx agrees on request of Bayer to talk to
such third party and discuss with such third party and Bayer the possibility of
obtaining rights or licenses for Bayer with respect to such conflicting patents
or patent applications.
ARTICLE 6
PAYMENTS
6.1 "Research Expenses" shall be equal to the total number of Symyx
Full-Time Equivalent ("FTE") research positions on all Projects in the Research
Program multiplied by Symyx's FTE rate [******] per FTE per year as of the
Effective Date, which rate will be increased annually to reflect changes in the
Consumers Price Index, All Consumers, as published by the U.S. Bureau of Labor
Statistics using 1998 as the base year).
6.2 Research Program Payments.
6.2.1 [******]
6.2.2 Quarterly Payments. The amounts to be paid in connection
with the Research Program with respect to each twelve (12) month period shall be
paid quarterly in advance. The initial payment shall be made no later than five
(5) business days after March 1, 1998. Subsequent payments shall be made on or
before the applicable quarterly anniversaries of March 1, 1998. All such
payments are non-refundable and noncreditable.
6.2.3 Modifications. Research Program Payments may only be
changed with unanimous approval of the Executive Committee.
6.3 Royalties.
6.3.1 [******]
6.3.2 [******]
6.3.3 [******]
(i) [******]
(ii) [******]
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(iii) [******]
(iv) [******]
(v) [******]
(vi) Impracticality. In the event that Bayer believes in
good faith that the agreed split of value added Net Income will make it
commercially impracticable to sell Products for use in manufacturing it may
notify Symyx. In such a case, Symyx will be open to discussing this issue on a
case-by-case basis.
6.3.4 [******]
6.3.5 Single Royalty; Non-royalty Sales. No royalty shall be
payable under this Section 6.3 with respect to sales of Products among Bayer and
its Affiliates for resale; and in no event shall more than one royalty be due
hereunder with respect to any Product unit even if covered by more than one
patent included in the Program Technology.
6.4 [******]
6.5 [******]
(A) [******]
(B) [******]
(C) [******]
6.6 [******]
6.6.1[******]
6.6.2 [******]
6.7 [******]
6.7.1 [******]
6.7.2 [******]
6.8 Royalties for New Projects. The parties will agree on the method of
compensation for Products stemming from projects pursued under an expansion of
this Agreement, prior to the addition of such Project in the corresponding
Field.
6.9 Royalty Term. Bayer's obligation to pay royalties to Symyx shall
continue for each Product, on a country-by-country basis, until the later of (i)
ten (10) years after the first commercial sale of such Product, or (ii) the
expiration of the last to expire issued patent covering such Product on a
country-by-country basis.
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6.10 Sublicenses. In the event that Bayer or its Affiliate grants a
Sublicense under the Program Technology or Symyx Technology to a third party
(other than an Affiliate of Bayer), Bayer shall pay to Symyx [******] per cent
([******] %) of all license fees, royalties, and other consideration (including
the fair market value of any noncash consideration) received by Bayer and its
Affiliates from each Sublicensee in respect of each such license or sublicense
under the Program Technology or Symyx Technology, in addition to any royalties
due to Symyx under Section 6.3, 6.4, 6.5, 6.6 or 6.7. Such fees, royalties, and
consideration shall in all cases be negotiated at arms-length.
6.11 Third Party Royalties. Bayer is responsible for all payments due to
third parties for the manufacture, sale, or use of Products by Bayer, its
Affiliates or Sublicensees.
6.12 Trade Secret Royalties. The parties acknowledge and agree that the
principal value contributed by Symyx is accelerated time to market, enhanced
probability of success and the potential for multiple Agreement Compounds and
that Symyx and/or Bayer may not own or control patents that cover the
manufacture, use or sale of a particular Product. Bayer acknowledges and agrees
that the value Bayer receives hereunder is in the conduct of research by Symyx
and access to the Agreement Compounds, and accordingly Bayer shall pay the
royalties at the rates specified in Section 6.3 (or an alternative amount agreed
by the parties under Section 6.4, 6.5, 6.6, 6.7,or 6.8) , regardless of whether
the applicable Agreement Compound or Product is covered by a patent application
or patent within the Program Technology or Bayer Technology; provided, however,
that if the applicable Agreement Compound or Product is not covered by a patent
application or patent within the Program Technology or Bayer Technology, then
the minimum royalties set forth in 6.3.3(iv) shall not apply.
6.13 Products Without Patent Protection. If no patent or pending patent
application within the Program Technology claims the method of making, use or
sale of a Product or an Agreement Compound used in making a Product, Symyx and
Bayer will use reasonable and appropriate efforts to maintain applicable trade
secret protection, if any, of such Product or its manufacture.
ARTICLE 7
EQUITY
7.1 Stock Purchase. On or before March 31, 1998, Bayer will have the
option of purchasing up to US$ [******] of Symyx Series D Preferred Stock;
provided, Bayer and Symyx enter into a Preferred Stock Purchase Agreement of
substantially the form set forth in Exhibit D.
ARTICLE 8
PAYMENTS; BOOKS AND RECORDS
8.1 Royalty Reports and Payments. After the first commercial sale of a
Product on which royalties are payable by Bayer or its Sublicensees hereunder,
Bayer shall make quarterly written reports to Symyx within ninety (90) days
after the end of each calendar quarter, stating in each such report, separately
for Bayer and each Sublicensee, the number, description, and
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aggregate Net Sales, by country, of each Product sold during the calendar
quarter upon which a royalty, or royalty alternative payment, is payable under
Section 6.3, 6.4, 6.5, 6.6, or 6.7 above. Concurrently with the making of such
reports, Bayer shall pay to Symyx all royalties or royalty alternative payments
due at the rates specified in such Sections.
8.2 Payment Method. All payments due under this Agreement shall be made
by bank wire transfer in immediately available funds to a bank account
designated by Symyx. All payments hereunder shall be made in U.S. dollars. In
the event that the due date of any payment subject to Article 6 hereof is a
Saturday, Sunday or national holiday, such payment may be paid on the following
business day. Any payments that are not paid within ten (10) days of the date
such payments are due under this Agreement shall bear interest at the prime rate
(as reported by the Bank of America, San Francisco, California, on the date such
payment is due) plus an additional two percent (2%), calculated on the number of
days such payment is delinquent; provided, however, that if the interest rate
specified herein exceeds the maximum rate permitted by law, then Bayer shall
only be obligated to pay interest at the maximum rate permitted by law. Nothing
in this Section 8.2 shall prejudice any other rights or remedies available to
Symyx hereunder or at law or equity.
8.3 Currency Conversions. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
8.4 Records; Inspection. Bayer and its Sublicensees shall keep complete,
true and accurate books of account and records for the purpose of determining
the royalty amounts payable under this Agreement. Such books and records shall
be kept at the principal place of business of such party, as the case may be,
for at least three (3) years following the end of the calendar quarter to which
they pertain. Such records will be open for inspection during such three (3)
year period by a public accounting firm to whom Bayer has no reasonable
objection, solely for the purpose of verifying royalty statements hereunder.
Such inspections may be made no more than once each calendar year, at reasonable
times and on reasonable notice. Inspections conducted under this Section 8.4
shall be at the expense of Symyx, unless a variation or error producing an
increase exceeding five percent (5%) of the amount stated for any period covered
by the inspection is established in the course of any such inspection, whereupon
all reasonable costs relating to the inspection for such period and any unpaid
amounts that are discovered will be paid promptly by Bayer together with
interest thereon from the date such payments were due at the prime rate (as
reported by the Bank of America, San Francisco, California), plus an additional
two percent (2%). Symyx agrees to hold in strict confidence all information
concerning royalty payments and reports, and all information learned in the
course of any audit or inspection, except to the extent necessary for Symyx to
reveal such information in order to enforce its rights under this Agreement or
if disclosure is required by law. The public accounting firm employees shall
sign a customary confidentiality agreement as a condition precedent to their
inspection, and shall report to Symyx only that information which would be
contained in a properly prepared royalty report by Bayer.
8.5 Tax Matters. All royalty amounts and other payments required to be
paid to
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Symyx pursuant to this Agreement shall be paid with deduction for withholding
for or on account of any taxes (other than taxes imposed on or measured by net
income) or similar governmental charge imposed by a jurisdiction other than the
United States (,,Withholding Taxes") to the extent Symyx and/or its Affiliates
or their successors has the lawful rights to utilize the Withholding Taxes paid
by Bayer as a credit against Symyx's and/or its Affiliates regular U.S. tax
liability. Bayer shall provide Symyx a certificate evidencing payment of any
Withholding Taxes hereunder.
ARTICLE 9
DUE DILIGENCE
9.1 Due Diligence. Bayer shall use reasonable and diligent efforts to
develop Agreement Compounds and commercialize Products in the relevant markets
of the world. The parties may mutually agree on reasonable specific criteria to
establish due diligence for each Project.
9.2 [******]
(i) [******]
(ii) [******]
(iii) [******]
9.3 Lack of Diligence.
9.3.1 [******]
9.3.2 [******]
9.3.3 [******]
9.4 Reports. During the term of this Agreement, Bayer shall provide
Symyx with written quarterly reports within thirty (30) days of the end of each
six (6) month period providing at least the following information, (i)
description of the status of the research and development activities conducted
with respect to each Agreement Compound while in development; and (ii) the
status of all patent applications claiming such Agreement Compounds. The reports
as described in this Section shall contain sufficient information to allow Symyx
to monitor Bayer's compliance with this Agreement. Until first commercial
introduction of each royalty-bearing Product, Bayer shall keep Symyx apprised of
the status of the commercial development of all such Products by semi-annually
providing Symyx with a written report detailing such activities with respect to
each such Product during the term of this Agreement. All reports and information
provided under this Section 9.4 shall be deemed Confidential Information of
Bayer.
ARTICLE 10
CONFIDENTIALITY
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10.1 Confidential Information. Except as otherwise expressly provided
herein, the parties agree that, until the later of (i) ten (10) years after the
Effective Date or (ii) five (5) years after termination of this Agreement, the
receiving party shall not, except as expressly provided in this Article 10,
disclose to any third party or use for any purpose any Confidential Information
furnished to it by the disclosing party hereto pursuant to this Agreement,
except to the extent that it can be established by the receiving party by
competent proof that such information:
(i) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(ii) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(iii) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(iv) was independently developed by the receiving party as
demonstrated by documented evidence prepared contemporaneously with such
independent development; or
(v) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not disclose such information to others.
10.2 Permitted Use and Disclosures. Each party hereto may (i) use
Confidential Information disclosed to it by the other in conducting the Research
Program and (ii) use or disclose Confidential Information disclosed to it by the
other party, to the extent such information is within the Program Technology and
such use or disclosure is reasonably necessary and permitted in (A) the exercise
of such rights granted hereunder, (B) filing or prosecuting patent applications,
(C) prosecuting or defending litigation, (D) complying with applicable
governmental regulations or court order or otherwise submitting information to
tax or other governmental authorities, or (E) making a permitted sublicense or
otherwise exercising license rights expressly granted by the other party
pursuant to the terms of this Agreement; provided that if a party is required to
make any such disclosure, other than pursuant to a confidentiality agreement, it
will give reasonable advance notice to the other party of such disclosure and,
save to the extent inappropriate in the case of patent applications, will use
its reasonable best efforts to secure confidential treatment of such information
in consultation with the other party prior to its disclosure (whether through
protective orders or otherwise) and disclose only the minimum necessary to
comply with such requirements.
10.3 Nondisclosure of Terms. Each of the parties hereto agrees not to
disclose the terms of this Agreement to any third party without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld, except to such party's attorneys, advisors, investors and
others on a need to know basis under circumstances that reasonably ensure the
confidentiality thereof, or as customary in connection with a public offering of
Symyx stock, or to the extent required by law. Notwithstanding the foregoing,
the parties shall agree
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upon a press release and timing to announce the execution of this Agreement, and
thereafter, Symyx and Bayer may each disclose to third parties the information
contained in such press release without the need for further approval by the
other. In addition, Bayer and Symyx may make public statements regarding the
progress of the Research Program and the achievement of milestones with respect
thereto, following consultation and mutual agreement, the consent of neither
party not to be unreasonably withheld.
10.4 Publication. Any manuscript by Symyx or Bayer describing the
scientific results of the Research Program to be published during the term of
the Research Program or within three (3) year after the end of the Research
Program shall be subject to the prior review of the parties at least ninety (90)
days prior to submission. Further, to avoid loss of patent rights as a result of
premature public disclosure of patentable information, the receiving party shall
notify the disclosing party in writing within thirty (30) days after receipt of
any disclosure whether the receiving party desires to file a patent application
on any invention disclosed in such scientific results. In the event that the
receiving party desires to file such a patent application, the disclosing party
shall withhold publication or disclosure of such scientific results until the
earlier of (i) the time a patent application is filed thereon, or (ii) the time
the parties determine, after consultation, that no patentable invention exists,
or (iii) ninety (90) days after receipt by the disclosing party of the receiving
party's written notice of the receiving party's desire to file such patent
application, or such other period as is reasonable for seeking patent
protection. Further, if such scientific results contain the information of the
receiving party that is subject to use and nondisclosure restrictions under this
Article 10, the disclosing party agrees to remove such information from the
proposed publication or disclosure.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 Bayer. Bayer represents and warrants that: (i) it has the authority
and right to enter into this Agreement and to perform all of its obligations
hereunder; and (ii) this Agreement is a legal and valid obligation binding upon
it and enforceable in accordance with its terms.
11.2 Symyx. Symyx represents and warrants that: (i) it has the authority
and right to extend the rights granted in this Agreement, (ii) this Agreement is
a legal and valid obligation binding upon it an enforceable in accordance with
its terms; (iii) it has the full right to enter into this Agreement, and to
fully perform its obligations hereunder; (iv) it has not previously granted, and
during the term of this Agreement will not knowingly or intentionally make any
commitment or grant any rights which are inconsistent in any material way with
the rights and licenses granted herein; and (v) to the best of its knowledge as
of the Effective Date, there are no existing or threatened actions, suits or
claims pending against it with respect to the Symyx Technology.
11.3 Disclaimer. Bayer and Symyx specifically disclaim any
representation, warranty or guarantee that the Research Program will be
successful, in whole or in part. It is understood that the failure of the
parties to successfully identify Agreement Compounds in the course of the
Research Program will not, alone, constitute a breach of any representation or
warranty or other obligation under this Agreement. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, SYMYX AND BAYER AND THEIR RESPECTIVE AFFILIATES
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MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PROGRAM TECHNOLOGY, SYMYX
TECHNOLOGY, BAYER TECHNOLOGY, LIBRARIES, AGREEMENT COMPOUNDS, INFORMATION
DISCLOSED HEREUNDER OR AGREEMENT PRODUCTS INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY
PROGRAM TECHNOLOGY, SYMYX TECHNOLOGY OR BAYER TECHNOLOGY, PATENTED OR
UNPATENTED, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.
ARTICLE 12
INDEMNIFICATION
12.1 Bayer. Bayer agrees to indemnify, defend and hold Symyx and its
Affiliates and their directors, officers, employees, agents and their respective
successors, heirs and assigns (the "Symyx Indemnitees") harmless from and
against any losses, costs, claims, damages, liabilities or expense (including
reasonable attorneys' and professional fees and other expenses of litigation)
(collectively, "Liabilities") arising, directly or indirectly out of or in
connection with third party claims, suits, actions, demands or judgments,
including without limitation, personal injury, product liability, patent
infringement (other than claims of infringement of Symyx patents licensed to
Bayer under this Agreement) and trade secret misappropriation matters, suits,
actions or demands relating to (i) any Agreement Compounds or Products
developed, manufactured, used, sold or otherwise distributed by or on behalf of
Bayer, its Sublicensees or other designees (including, without limitation,
product liability claims and patent infringement claims ) other than claims of
infringement of Symyx patents licensed to Bayer under this Agreement), (ii)
Bayer's performance of the Research Program, and (iii) any breach by Bayer of
the representations and warranties made in this Agreement, except, in each case,
to the extent such Liabilities result from the gross negligence or intentional
misconduct of Symyx.
12.2 Symyx. Symyx agrees to indemnify, defend and hold Bayer, its
Affiliates and Sublicensees and their respective directors, officers, employees,
agents and their respective heirs and assigns (the "Bayer Indemnitees") harmless
from and against any losses, costs, claims, damages, liabilities or expense
(including reasonable attorneys' and professional fees and other expenses of
litigation) (collectively, "Liabilities") arising, directly or indirectly out of
or in connection with third party claims, suits, actions, demands or judgments,
including without limitation personal injury and product liability matters,
suits, actions, demands relating to (i) any product developed, manufactured,
used, sold or otherwise distributed by or on behalf of Symyx, its Affiliates,
licensees or other designees (other than Bayer, its Affiliates and Sublicensees)
pursuant to Section 5.1.3 herein (including, without limitation, product
liability and patent infringement claims), and (ii) any breach by Symyx of its
representations and warranties made in this Agreement, except, in each case, to
the extent such Liabilities result from the gross negligence or intentional
misconduct of Bayer.
12.3 Procedure. In the event that any Indemnitee (either a Bayer
Indemnitee or a Symyx Indemnitee) intends to claim indemnification under this
Article 12 it shall promptly notify the other party in writing of such alleged
Liability. The indemnifying party shall have the
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right to control the defense thereof with counsel of its choice as long as such
counsel is reasonably acceptable to Indemnitee; provided, however, that any
Indemnitee shall have the right to retain its own counsel at its own expense,
for any reason, including if representation of any Indemnitee by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
reasonably represented by such counsel in such proceeding. The affected
Indemnitee shall cooperate with the indemnifying party and its legal
representatives in the investigation of any action, claim or liability covered
by this Article 12. The Indemnitee shall not, except at its own cost,
voluntarily make any payment to incur any expense with respect to any claim or
suit without the prior written consent of the indemnifying party, which such
party shall not be required to give.
ARTICLE 13
TERMINATION
13.1 Term of Agreement. The term of this Agreement shall commence on the
Effective Date, and shall continue in full force and effect on a
country-by-country and Product-by-Product basis until Bayer and its Affiliates
and Sublicensees have no remaining royalty payment obligations in a country,
unless terminated earlier as provided in this Article 13.
13.2 Breach.
13.2.1 Termination of Agreement. Either party to this Agreement
may terminate this Agreement as to any other party hereto in the event such
other party shall have materially breached or defaulted in the performance of
any of its material obligations hereunder, and such default shall have continued
for sixty (60) days after written notice thereof was provided to the breaching
party by the non-breaching party. Any termination shall become effective at the
end of such sixty (60) day period unless the breaching party (or any other party
on its behalf) has cured any such breach or default prior to the expiration of
the sixty (60) day period; provided, however, in the case of a failure to pay
any amount due hereunder, such default may be the basis of termination fifteen
(15) business days following the date that notice of such default was provided
to the breaching party.
13.2.2 Termination of Research Program. If, during the Research
Program Term, Symyx shall have materially breached or defaulted in the
performance of any of its material obligations hereunder, and such breach or
default shall have continued for sixty (60) days after written notice thereof
was provided to Symyx, Bayer may, in its discretion, choose to either (i)
terminate the Agreement or (ii) upon written notice to Symyx, terminate the
Research Program without terminating the Agreement. Any such termination of the
Agreement or the Research Program shall become effective at the end of such
sixty (60) day period unless Symyx (or any other party on its behalf) has cured
any such breach or default prior to the expiration of the sixty (60) day period.
In the event Bayer terminates the Research Program and not the Agreement, as set
forth in this section 13.2.2, Bayer shall not be obligated to pay the Research
Expenses as set forth in Sections 6.1 and 6.2 for research conducted after such
termination. It is understood that among other things, termination of the
Research Program without termination of the Agreement, as set forth in this
Section 13.2.2 shall not constitute termination of the licenses set forth in
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Article 5 or the payment obligations set forth in Article 6 (other than Research
Expenses); provided, however, "Program Technology" shall not include any Patent
Rights or Know-How or other inventions, discoveries, data, or information, or
intellectual property rights in and to such inventions, discoveries, data, or
information made, conceived, reduced to practice, or otherwise developed solely
or jointly by Symyx, after termination of the Research Program.
13.3 Termination for Insolvency. If voluntary or involuntary proceedings
by or against a party are instituted in bankruptcy under any insolvency law, or
a receiver or custodian is appointed for such party, or proceedings are
instituted by or against such party for corporate reorganization, dissolution,
liquidation or winding-up of such party, which proceedings, if involuntary,
shall not have been dismissed within sixty (60) days after the date of filing,
or if such party makes an assignment for the benefit of creditors, or
substantially all of the assets of such party are seized or attached and not
released within sixty (60) days thereafter, the other party may immediately
terminate this Agreement effective upon notice of such termination.
13.4 Effect of Expiration or Termination.
13.4.1 Accrued Rights and Obligations. Expiration or termination
of this Agreement for any reason shall not release either party hereto from any
liability or obligation which, at the time of such termination, has already
accrued to the other party or which is attributable to a period prior to such
termination nor preclude either party from pursuing any rights and remedies it
may have hereunder or at law or in equity with respect to any breach of these
Agreement.
13.4.2 Stock on Hand. In the event of the cancellation or
termination of any license rights with respect to a Product prior to the
expiration of this Agreement, inventory of the Product on hand at the time of
such cancellation or termination may be sold for up to six (6) months after date
of such cancellation or termination, subject to Articles 6 and 8 and the other
applicable terms of this Agreement.
13.4.3 Licenses.
(i) In the event of a termination by Symyx pursuant to
Section 13.2 or 13.3, the licenses and rights granted Bayer herein, other than
the license set forth in Section 5.1.2, shall terminate.
(ii) If Bayer's rights terminate with respect to a
particular Agreement Compound and/or Product for failure to meet the diligence
requirements of Section 9.1, and more than one Product is being commercially
developed or exploited by Bayer or its Sublicensees hereunder, then Symyx shall
be entitled to terminate this Agreement only with respect to the applicable
Agreement Compounds and Products.
13.5 Survival. Sections 2.6, 2.7, 2.8, 5.1.2, 5.1.3, 5.7, 5.9, 6.3, 6.4,
6.5, 6.6, 6.7, 6.9, 6.10, 11.3, 13.4, 13.5 and Articles 4, 8, 10, 12, 14 of this
Agreement shall survive the expiration or termination of this Agreement for any
reason.
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ARTICLE 14
MISCELLANEOUS
14.1 Governing Laws. This Agreement and any dispute arising from the
construction, performance or breach hereof shall be governed by and construed
and enforced in accordance with, the laws of the state of California, without
reference to conflicts of laws principles.
14.2 No Implied Licenses. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be created by implication, estoppel or otherwise.
14.3 Waiver. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
14.4 Assignment. This Agreement shall not be assignable by either party
to any third party hereto without the written consent of the other party hereto,
except either party may assign this Agreement, without such consent, to an
entity that acquires all or substantially all of the business or assets of such
party to which this Agreement pertains, whether by merger, reorganization,
acquisition, sale, or otherwise. This Agreement shall be binding upon and accrue
to the benefit any permitted assignee, and any such assignee shall agree to
perform the obligation of the assignor.
14.5 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint ventures of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
14.6 Performance Warranty. Bayer hereby warrants and guarantees the
performance of any and all rights and obligations of this Agreement by its
Affiliates and Sublicensees.
14.7 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of rights under this
license including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import and export and sale of Products
pursuant to this Agreement.
14.8 Export Control Regulations. The rights and obligations of the
parties under this Agreement, shall be subject in all respects to United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad, including the United States Foreign Assets
Control Regulations, Transaction Control Regulations and Export Control
Regulations, as amended, and any successor legislation issued by the Department
of Commerce, International Trade Administration, or Office of Export Licensing.
Without in any way limiting the provisions of this Agreement, Bayer agrees that,
unless prior authorization is obtained from the Office of Export Licensing, it
shall not export, reexport, or transship, directly or indirectly, to any
country, any of the technical data disclosed to Bayer by Symyx if such
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export would violate the laws of the United States or the regulations of any
department or agency of the United States Government.
14.9 Patent Marking. Bayer agrees to mark and have its Sublicensees mark
all Products sold pursuant to this Agreement in accordance with the applicable
statute or regulations relating to patent marking in the country or countries of
manufacture and sale thereof.
14.10 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other parties hereto and shall be deemed to have been given upon
receipt.
Symyx: Symyx Technologies
3100 Central Expressway
Santa Clara, CA 95051 USA
Attn: Chief Financial Officer
Bayer: Bayer AG
D-51368 Leverkusen
Germany
Attn: Head of Central Research
Copy: Patents & Licensing Department
14.11 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect to
the fullest extent permitted by law without said provision, and the parties
shall amend the Agreement to the extent feasible to lawfully include the
substance of the excluded term to as fully as possible realize the intent of the
parties and their commercial bargain.
14.12 Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses (except for payment obligations)
on account of failure of performance by the defaulting party if the failure is
occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
embargo, governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the reasonable control and
not caused by the negligence, intentional conduct or misconduct of the
non-performing party and such party has exerted all reasonable efforts to avoid
or remedy such force majeure; provided, however, that in no event shall a party
be required to settle any labor dispute or disturbance.
14.13 Complete Agreement. This Agreement with its Exhibits, and Stock
Purchase Agreement executed by the parties of even date herewith constitutes the
entire agreement, both written and oral, between the parties with respect to the
subject matter hereof, and all prior agreements respecting the subject matter
hereof, either written or oral, express or implied, shall be abrogated,
canceled, and are null and void and of no effect. The Interim Research Funding
Agreement is hereby terminated and superseded by this Agreement; provided,
however that all information and materials subject to the confidentiality
provisions of the Interim Research Funding Agreement shall be treated as
Confidential Information subject to this Agreement. No
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amendment or change hereof or addition hereto shall be effective or binding on
either of the parties hereto unless reduced to writing and executed by the
respective duly authorized representatives of Symyx and Bayer.
14.14 Dispute Resolution. Any dispute under this Agreement which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by three (3) neutral arbitrators appointed in accordance
with said rules, unless the parties agree to conduct such arbitration with a
single arbitrator. The arbitration shall be held in San Francisco, California,
and the arbitrators shall be independent experts with a background suitable for
the matters in dispute. The arbitrators shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrators shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original and a true copy
thereof. The costs of arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties. Each party shall bear its own
costs and attorneys' and witness' fees. A disputed performance or suspended
performances pending the resolution of the arbitration must be completed within
thirty (30) days following the final decision of the arbitrators or such other
reasonable period as the arbitrators determine in a written opinion. Any
arbitration subject to this Section 14.14 shall be completed within one (1) year
from the filing of notice of a request for such arbitration. The award shall be
final and binding upon the parties hereto.
14.14.1 [******]
14.15 Remedies. It is understood that the remedies provided in Section
9.3 shall not prejudice any other rights or remedies available to Symyx
hereunder or at law or equity, and shall not preclude Symyx from pursuing any
rights and remedies available to Symyx with respect to any breach of this
Agreement.
14.16 Headings. The captions to the several Section hereof are not part
of this Agreement, but are included merely for convenience of reference and
shall not affect its meaning or interpretation.
14.17 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
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<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
SYMYX TECHNOLOGIES BAYER AG
By: /s/ ISY GOLDWASSER By: /s/ H.J. ROSENKRANZ
------------------------- -----------------------------
Title: President Title: Head of Central Research
---------------------- --------------------------
Date: 2/27/98 Date: 3/3/1998
----------------------- ---------------------------
By: /s/ W. VAN KERCKHOFF
--------------------------
Title: Lic. Manager
--------------------------
Date: 03/03/1998
---------------------------
Exhibit A - Definitions
Exhibit B - Procedure for Lead Compound Identification
Exhibit C - Description of Initial Fields and Projects
Exhibit D - Stock Purchase Agreement
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EXHIBIT A
DEFINITIONS
1.1 "Agreement Compound" shall mean any Lead Compound [******].
1.2 "Bayer Technology" shall mean all patents, copyrights, trade secrets,
know-how, data, and other intellectual property of any kind owned, in whole or
part, or controlled by Bayer during the term of this Agreement which relates to
an invention conceived and reduced to practice outside the Research Program by
Bayer. For purposes of clarification, Bayer Technology includes process
development performed by or under authority of Bayer or its Affiliates outside
of the Research Program. Bayer Technology excludes Combinatorial Chemistry
Technology developed in connection with the conduct of the Research Program.
1.3 [******]
1.4 [******]
1.5 "Confidential Information" shall mean (i) any proprietary or confidential
information or material in tangible form disclosed hereunder that is marked as
,,Confidential" at the time it is delivered to the receiving party, (ii)
proprietary or confidential information disclosed orally hereunder which is
identified as confidential or proprietary when disclosed and such disclosure of
confidential information is confirmed in writing within thirty (30) days by the
disclosing party (iii) written information that is marked as "Confidential" that
contains financial projections, business plans, marketing plans, cost
projections, or manufacturing plans or other confidential business information
related to commercialization or development of Products or Agreement Compounds.
Data generated in the course of the Research Program concerning the activity of
Agreement Compounds within the applicable Field shall be treated as Confidential
Information with respect to provisions regarding disclosure of Confidential
Information.
1.6 [******]
(i) [******]
(ii) [******]
(iii) [******]
1.7 "Executive Committee" or "EC" shall have the meaning set forth in Section
3.1.
1.8 "Field" shall mean a defined, mutually agreed, area of research within the
Research Program focused on the development of Agreement Compounds for the
production of one or more Products. The initial Fields for this Agreement are
described in Section 2.2.1. Each Field may include one or more Projects.
1.9 "Lead Compound" shall mean a compound contained in a library prepared by or
on behalf of Symyx under the Research Program, or screened by Symyx under the
Research Program, that meets the specific physical and/or chemical properties
established as Lead Criteria by the
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the omitted portions.
<PAGE> 28
Research Committee. Any compound that (i) is identified in a Project as having
activity within the applicable Field and (ii) thereafter enters development, or
is sold or otherwise commercialized, by Bayer or its Affiliates or Sublicensees
shall also be deemed a Lead Compound for all purposes of this Agreement.
1.10 "Lead Criteria" shall mean the specific physical and chemical properties
established by the RFC in the applicable Project Plan for identifying a Lead
Compound.
1.11 "Manufacturing Costs" shall mean (i) all direct and indirect costs related
to the manufacture by Bayer or its Affiliates of Products, including costs for
personnel, materials, quality control, regulatory compliance, administrative
expenses, subcontractors, fixed and variable manufacturing overhead costs and
business unit or division costs reasonably allocable to the manufacture of
Products, as determined and allocated in accordance with generally accepted
accounting principles, consistently applied, excluding costs for excess
manufacturing capacity not reasonably related to projected demand for Products,
or (ii) with respect to Products purchased from a third party vendor, reasonable
amounts actually paid to the vendor for such Products in arm's length
transactions.
1.12 "Net Income" shall mean the Net Sales with respect to a Product, less: (a)
Manufacturing Costs for such Product; and (b) reasonable expenses incurred by
Bayer in connection with the marketing, shipping or sale of the Product, and
general and administrative expenses relating thereto, all as determined and
allocated in accordance with generally accepted accounting principles,
consistently applied.
1.13 "Net Sales" shall mean the invoice price of any Product sold by Bayer or
its Affiliates to bona fide independent third parties, less, to the extent
included in such invoice price the total of: (1) ordinary and customary trade
discounts actually allowed; (2) credits, rebates and returns; (3) freight and
duties paid for and separately identified on the invoice or other documentation
maintained in the ordinary course of business, and (4) excise taxes, other
consumption taxes, customs duties and other compulsory payments to governmental
authorities actually paid and separately identified on the invoice or of the
documentation maintained in the ordinary course of business. Net Sales shall
also include the amount of fair market value of all other consideration received
by Bayer or its Affiliates in respect of Products, whether such consideration is
in cash, payment in kind, exchange or another form.
1.14 "Product" shall mean any product within the scope of a Field which
incorporates an Agreement Compound or utilizes an Agreement Compound in its
manufacture or is made utilizing a method or process within the Program
Technology. (cf. 6.11 and 6.12)
1.15 "Program Technology" shall mean any Patent Right and Know-How conceived,
reduced to practice, or otherwise developed by the parties in connection with
the conduct of the Research Program. For purposes of clarification, Program
Technology includes process development performed by or under authority of Symyx
or Bayer, or jointly by Symyx and Bayer, in the course of performing the
Research Program. Program Technology shall not include any Symyx Technology,
Bayer Technology or Combinatorial Chemistry Technology.
1.15.1 "Know-How" shall mean all data, instructions, processes, formulas
and
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information, including, without limitation, chemical, physical and analytical,
safety, manufacturing and quality control data and information which is
necessary for the development, manufacture or use of Agreement Compounds or
Products. Know-How does not include any inventions included in the Patent
Rights.
1.15.2 "Patent Rights" shall mean (i) any patent or patent
application claiming an invention conceived and reduced to practice by Symyx or
Bayer, or jointly by the parties, in the course of performing the Research
Program which claims an Agreement Compound or a Product, or method or process
for the synthesis of an Agreement Compound or Product, or a
composition-of-matter containing an Agreement Compound or Product, or a method
or process for the use of an Agreement Compound in or for the manufacture of a
Product, and (ii) any divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions or other governmental actions which extend any of the
subject matter of the patent applications or patents in (i) above, and any
substitutions, confirmations, registrations or revalidations of any of the
foregoing.
1.16 "Project" shall mean a research effort within a Field focused on the
identification and development of Lead Compounds with mutually agreed upon
characteristics, or uses, for the manufacture of Product(s). Projects shall
include the initial Projects referenced in Section 2.2.3, and any additional
Projects that become part of the Research Program in accordance with Section
3.1.1.
1.17 "Project Plan" shall mean the written overall plan to be prepared annually
by the applicable RFC for the research to be conducted with respect to a
particular Project in a given year, which shall include a budget, time lines,
staffing requirements and research objectives, as may be amended by the RFC from
time to time.
1.18 "Research Expenses" shall have the meaning set forth in Section 6.1.
1.19 "Research Field Committee" or "RFC" shall have the meaning set forth in
Section 3.2.1.
1.20 "Research Program" shall mean all research activities conducted by Symyx
and Bayer on a collaborative basis under this Agreement, with the goal of
discovering Agreement Compounds within the Fields, in accordance with the
Project Plans.
1.21 "Research Program Term" shall have the meaning described in Section 2.4.1.
1.22 "Sublicensee" shall mean, with respect to a particular Product, a third
party to whom Bayer (or its Affiliate) has granted a license or sublicense to
develop, make, import, use, offer for sale or sell such Product (each such
license or sublicense referred to in this Agreement as a "Sublicense"). As used
in this Agreement, ,,Sublicensee" shall also include a third party to whom Bayer
has granted the right to distribute such Product, provided that such third party
has the primary responsibility for marketing and promotion at its expense of
such Product within the field or territory for which such distribution rights
are granted.
1.23 "Specialty Product" shall mean chemicals and materials which are not
Commodity Products.
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1.24 "Symyx Technology" shall mean all patents, copyrights, trade secrets,
know-how, data, and other intellectual property of any kind owned or controlled
by Symyx during the term of this Agreement which relates to an invention
conceived and reduced to practice outside the Research Program by Symyx. Symyx
Technology excludes Combinatorial Chemistry Technology.
1.25 [******]
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the omitted portions.
<PAGE> 31
EXHIBIT B
PROCEDURE FOR LEAD COMPOUND IDENTIFICATION
1. At such time as Symyx has identified a compound which it believes may meet
the Lead Criteria for a particular project, it shall provide the data and
results supporting such conclusion to the applicable RFC.
2. Symyx will, on request of Bayer, use reasonable efforts to provide reasonable
quantities of such compound for Bayer to confirm whether it meets the applicable
Lead Criteria.
3. The RFC shall review the results provided by Symyx and Bayer with respect to
a particular Lead Compound, and if such results indicate that the applicable
Lead Criteria have been satisfied, the RFC shall deem such compound to be a Lead
Compound for all purposes of this Agreement.
4. In the event that the RFC requests further information or the conduct of
further studies to confirm whether a particular Lead Compound meets the
applicable Lead Criteria, Symyx and Bayer shall use reasonable efforts to
prepare any such information and conduct any such studies.
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EXHIBIT C
INITIAL FIELDS
[******]
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 33
EXHIBIT D
[PREFERRED STOCK PURCHASE AGREEMENT]
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EXHIBIT 10.8(a)
AMENDMENT NO. 1 TO COLLABORATION AGREEMENT
This Amendment No. 1 to Collaboration Agreement (the "Amendment"),
effective as of May 1, 1998 (the "Amendment Effective Date"), is entered into by
and between Symyx Technologies ("Symyx"), a California corporation having a
principal place of business at 3100 Central Expressway, Santa Clara, California,
and Bayer AG ("Bayer"), a German corporation having a principal place of
business at D-51368 Leverkusen, Germany, and amends that certain Collaboration
Agreement entered into by and between Symyx and Bayer effective as of March 1,
1998 (the "Collaboration Agreement").
WHEREAS, Symyx and Bayer desire to amend the Collaboration Agreement to
provide for research in the [******] Field as set forth more fully below;
NOW THEREFORE, the parties hereby agree as follows:
1. All capitalized terms not defined in this Amendment shall have the meanings
given to them in the Collaboration Agreement.
2. Section 2.2.1(a) of the Collaboration Agreement is amended to read in its
entirety as follows:
(a) Addition of [******] Field.
(i) The Research Program shall include the [******] Field,
which shall be defined as [******].
(ii) Symyx agrees to dedicate [******]
(iii) Bayer agrees to pay Symyx Research Expenses for research
activities in the [******] Field as set forth in Section 6.2.1(b) and
to pay Symyx royalties in accordance with Section 6.14.
(iv) Following termination of research activities within the
[******] Field, the corresponding Research Field Committee will prepare
a summary of Program Technology generated in the course of the research
activities for the [******] Field.
3. Section 6.2.1(b) is amended to read in its entirety as follows:
(b) [******]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 2
4. Article 6 is amended by addition of the following new Section 6.14:
6.14 [******]
(a) [******]
(b) [******]
5. Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or amended, is
hereby ratified, confirmed and approved. No provision of this Amendment may be
modified or amended except expressly in a writing signed by both parties nor
shall any terms be waived except expressly in a writing signed by the party
charged therewith. This Amendment shall be governed by, construed and enforced
in accordance with the laws of the State of California, without reference to
conflicts of laws principles.
IN WITNESS WHEREOF, each of the parties has executed this Amendment as
of the date indicated on this Amendment.
BAYER AG SYMYX TECHNOLOGIES
By: /s/ RUDOLF CASPER By: /s/ ISY GOLDWASSER
-------------------------- ------------------------
Name: Prof. Dr. Rudolf Casper Name: Isy Goldwasser
-------------------------- ------------------------
Title: Director R/D Title: President & COO
-------------------------- ------------------------
Date: 3.6.1998 Date: May 28, 1998
-------------------------- ------------------------
By: /s/ I.V. KOPP
--------------------------
Name: Dr. Kopp
--------------------------
Title: Licensing Manager
--------------------------
Date: June 3, 1998
--------------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 1
EXHIBIT 10.8(b)
AMENDMENT NO. 2 TO COLLABORATION AGREEMENT
BAYER AG - SYMYX TECHNOLOGIES
This Amendment No. 2 to Collaboration Agreement (the "Second
Amendment"), effective as of November 1, 1998, is entered into by and between
Symyx Technologies ("Symyx"), a California corporation having a principal place
of business at 3100 Central Expressway, Santa Clara, California 95051 ("Symyx"),
and Bayer AG, a German corporation, having a principal place of business at
D-51368 Leverkusen, Germany, and amends that certain Collaboration Agreement
entered into by and between Symyx and Bayer effective as of March 1, 1998, as
previously amended by Amendment No 1 to Collaboration Agreement effective as of
May 1, 1998 (the "Collaboration Agreement").
WHEREAS, Symyx and Bayer desire to amend the Collaboration Agreement to
provide for research concerning [******], as more fully set forth below;
NOW THEREFORE, the parties hereby agree as follows:
1. All capitalized terms not defined in this Second Amendment shall have
the meanings given to them in the Collaboration Agreement.
2. Section 2.2.1(b) is amended to read in its entirety as follows:
(b) Addition of [******] Project. Effective as of September 1,
1998, the [******] Field shall also include the [******] Project, which
shall be directed to discovery, creation, identification and research
of [******].
3. Section 2.3 is amended to read in its entirety as follows:
2.3 [******]
4. The following new sentence is added to the end of Section 5.2:
"Notwithstanding any other provision of this Agreement, Bayer shall not
have a right of first negotiation with respect to Program Technology
that is identified, discovered or reduced to practice in connection
with the [******] Project , and Bayer agrees not to perform research or
use any Lead Compound from the [******] Project other than in
connection with [******], unless Symyx provides written consent."
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
1
<PAGE> 2
5. Section 6.2.1 is amended by the deletion of subsection 6.2.1(a).
6. Section 6.5 is amended to read in its entirety as follows:
6.5 [******] Project and [******] Project.
6.5.1 [******]
6.5.2 [******]
7. Exhibit A is amended by addition of the following new Section 1.26:
1.26 "Affiliate" shall mean any individual or entity directly
or indirectly controlling, controlled by or under common control with,
Symyx Technologies or Bayer AG. For purposes of this Agreement, the
direct or indirect ownership of fifty percent (50%) or more of the
outstanding voting securities of an entity, or the right to receive
fifty percent (50%) or more of the profits or earnings of an entity
shall be deemed to constitute control, or if not meeting the preceding
requirements, any company owned or controlled by, or owning or
controlling, Bayer or Symyx at the maximum control or ownership right
permitted in a country where such company exists. Such other
relationship as in fact results in actual control over the management,
business and affairs of an entity shall also be deemed to constitute
control.
8. Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this Amendment may be modified or amended except expressly in a writing
signed by both parties nor shall any terms be waived except expressly
in a writing signed by the party charged therewith. This Amendment
shall be governed by, construed and enforced in accordance with the
laws of the State of California, without reference to conflicts of laws
principles.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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<PAGE> 3
IN WITNESS WHEREOF, each of the parties has executed this Amendment as of the
date indicated on this Amendment.
BAYER AG SYMYX TECHNOLOGIES
By: /s/ DAHME By: /s/ ISY GOLDWASSER
--------------------- ---------------------
Name: DAHME Name: ISY GOLDWASSER
--------------------- ---------------------
Title: Managing Director Title: President & COO
--------------------- ---------------------
Date: November 12, 1998 Date: November 10, 1998
--------------------- ---------------------
By: /s/ ENGELS
---------------------
Name: Engels, Hans W.
---------------------
Title: VP - PU Research
---------------------
Date: November 19, 1998
---------------------
3
<PAGE> 1
EXHIBIT 10.8(c)
AMENDMENT NO. 3 TO COLLABORATION AGREEMENT
This Amendment No. 3 to Collaboration Agreement (the "Amendment No. 3")
effective as of January 1, 1999, is entered into by and between Symyx
Technologies ("Symyx") and Bayer AG ("Bayer"), and amends that certain
Collaboration Agreement entered into by Bayer and Symyx effective as of March 1,
1998, as previously amended by Amendment No. 1 to Collaboration Agreement
effective as of May 1, 1998 and Amendment No. 2 to Collaboration Agreement
effective as of November 1, 1998 (the "Collaboration Agreement").
1. All capitalized terms not defined in this Amendment No. 3 shall have
the meanings given to them in the Collaboration Agreement.
2. Section 2.2.1 is amended by the addition of new Section 2.2.1(c):
(c) Addition of [******] Project.
(i) Effective as of January 1, 1999, the Research Program
shall include the [******] Field, which is defined as
set forth in Exhibit E.
(ii) FTEs and Experiments. During each calendar year
quarter from January 1, 1999 to December 31, 2001,
Symyx shall, in its discretion taking into
consideration what is required to achieve the
objectives of the Project Plan for the [******]
Field, either (i) utilize [******] FTEs to conduct
the research in the [******] Field or [******]. Each
FTE utilized by Symyx shall be qualified for the
activities assigned to him or her. [******]
(iii) Bayer agrees to pay Symyx (i) Research Expenses for
research activities in the [******] Field as set
forth in Section 6.2.1(c), (ii) royalties with
respect to Products in accordance with Section 6.15,
and (iii) a technology access payment in accordance
with Section 6.16.
(iv) Following termination of research activities within
the [******] Field, the corresponding Research Field
Committee will prepare a summary of Program
Technology generated in the course of the research
activities for the [******] Field.
3. Section 2.4 is amended to read in its entirety as follows:
2.4 Research Program Term
2.4.1 Initial Term.
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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<PAGE> 2
(a) [******]
(b) [******]
2.4.2 Extension of Research Program Term. Both parties
intend to identify and propose additional Projects
(including appropriate product driven targets) that
will justify the extension of the Research Program,
and agree that not less than six (6) months before
expiration of the Initial Research Term and any
Extended Research Term, the Executive Committee will
meet to discuss possible Projects for extension of
the Research Program. Upon written agreement of the
parties, the Research Program Term (for activities in
the Research Program other than research in the
[******] Field) may be extended up to three (3) years
(the "Extended Research Term"). Except as the parties
may otherwise agree, the funding for activities
(other than research activities in the [******]
Field) in the Research Program during the Extended
Research Term, if any, shall be not less than
[******] from March 1, 2000 to February 28, 2001, not
less than [******] from March 1, 2001 to February 28,
2002, and not less than [******] from March 1, 2002
to February 28, 2003.
4. Add the following new Section 2.9 to Article 2:
2.9 Other [******] Research by Symyx. It is understood that Symyx
will conduct research activities outside the Research Program
("Other [******] Research") during the Research Program Term
for itself and/or Third Parties for the purpose of [******].
In the event some Symyx employees work on both the Research
Program and the Other [******] Research, Symyx shall use good
faith commercially reasonable efforts to avoid potential
conflicts or overlaps between the Research Program and Other
[******] Research and misappropriation of any Confidential
Information. It is understood that the library compounds are
regularly used by Symyx and that Symyx can use and screen the
library compounds for any use on its own behalf or for Third
Parties, including without limitation for Other [******]
Research, except to the extent that Symyx has granted to Bayer
exclusive rights to screen and optimize the library compounds
in the [******] Field as set forth in Section 5.1.1.
5. Add the following new Section 2.10 to Article 2:
2.10 [******]
6. Section 4.1 is amended to provide in its entirety as follows:
4.1 Program Technology.
4.1.1 All Fields Except [******] Field. Except as provided
in Sections 4.1.2 and 4.3, title to all inventions
and other intellectual property made by employees or
agents of Bayer and Symyx in the course of and in
connection with the Research Program shall be deemed
owned jointly by Symyx and Bayer,
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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<PAGE> 3
excluding Combinatorial Chemistry Technology. It is
understood that, except as otherwise expressly
provided in this Agreement, both Bayer and Symyx may
use, sublicense, commercialize, or otherwise exploit
all such jointly-owned technology without the consent
of, or obligation to account to, the other party.
4.1.2 [******] Field. Bayer shall own any inventions or
discoveries conceived and reduced to practice and
other intellectual property otherwise developed
solely by personnel of Bayer or Bayer's Affiliates in
the course of the Research Program relating to the
[******] Field ("Bayer [******] Inventions"). Symyx
shall own any inventions or discoveries conceived and
reduced to practice and other intellectual property
otherwise developed solely by Symyx personnel in the
course of the Research Program Program relating to
the [******] Field ("Symyx [******] Inventions").
Bayer and Symyx shall jointly own any inventions or
discoveries conceived and/or reduced to practice in
the course of the Research Program relating to the
[******] Field where personnel of Symyx and of Bayer
have each made inventive contributions to such
inventions which would result in them being
determined to be joint inventors in accordance with
United States patent law and other intellectual
property otherwise developed jointly by personnel of
Symyx and Bayer ("Joint [******] Inventions").
7. Section 5.1.2 is amended to provide in its entirety as follows:
5.1.2 Bayer Out of Field License. Except with respect to
Program Technology conceived or reduced to practice
or otherwise developed in connection with the
research conducted in the [******] Field in
connection with the Research Program, Symyx agrees to
grant and hereby grants to Bayer an exclusive,
worldwide, royalty-free license, with the right to
sublicense, under Symyx's interest in Program
Technology which was invented solely by Bayer
employees and agents, to use such Program Technology
outside of the Field and to develop, make, have made,
import, use, offer for sale, and sell products other
than for use in the applicable Field.
8. Section 5.1.3 is amended to provide in its entirety as follows:
5.1.3 Symyx Out of Field License. Except with respect to
Program Technology conceived or reduced to practice
or otherwise developed in connection with the
research conducted in the [******] Field in
connection with the Research Program, Bayer agrees to
grant and hereby grants to Symyx an exclusive,
worldwide, royalty-free license, with the right to
sublicense, under Bayer's interest in Program
Technology which was invented solely or jointly by
Symyx employees and agents, to use such Program
Technology outside of the Field and to develop, make,
have made, import, use, offer for sale, and sell
products other than for use in the applicable Field.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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Bayer, Bayer's Affiliates, Symyx, and Symyx's
Affiliates shall each have the right to use Joint
[******] Inventions for internal research purposes
outside of the scope of the [******] Field; provided,
however, that Symyx shall have the sole right to
grant and authorize licenses and sublicenses under
such Joint [******] Inventions to third parties
outside of the scope of the [******] Field. It is
further understood and agreed that Symyx shall have
the right to grant third parties licenses under Joint
[******] Inventions outside of the scope of the
[******] Field that are exclusive even as to Bayer
and Symyx, and it is specifically understood and
agreed that Symyx may grant exclusive licenses under
such Joint [******] Inventions outside of the
[******] Field to certain third parties in connection
with the Other [******] Research described in Section
2.9, and that Symyx shall not be required to pay any
amounts to Bayer hereunder in connection with such
licenses.
9. Section 5.2 is amended to provide in its entirety as follows:
5.2 Bayer Right of First Negotiation. Subject to Symyx's
obligations to third parties, Bayer will have a right of first
negotiation to negotiate with Symyx to acquire an exclusive,
worldwide, royalty-bearing license under Symyx's interest in
Program Technology with the right to sublicense, to develop,
make, have made, import, use, offer for sale and sell products
other than Products, as follows: (i) Symyx will provide notice
if it wishes to pursue a particular product using Program
Technology solely or jointly invented by Symyx employees, and
in such event within sixty (60) days the parties shall
commence negotiations; (ii) such negotiations shall continue
for six (6) months from the date of such notice, or such
longer period as the parties may agree; (iii) if Symyx and
Bayer do not reach agreement within such six (6) month period,
or such longer period as the parties may agree, Symyx may
develop or commercialize such products (other than Products)
with a third party or pursue such product itself without
obligation to Bayer. However, notwithstanding any other
provision of this Agreement, Bayer shall not have a right of
first negotiation with respect to Program Technology that is
identified, discovered or reduced to practice in connection
with the [******] Project or the research in the [******]
Field, and Bayer agrees (i) not to perform research or use any
Lead Compound from the [******] Project other than in
connection with [******] and (ii) not to perform research or
use any Lead Compound from the research in the [******] Field
other than in connection with [******], unless Symyx provides
written consent.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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<PAGE> 5
10. Section 5.6 is amended to read in its entirety as follows:
5.6 Combinatorial Chemistry Access & Bayer/Symyx Interface
5.6.1 Access to Combinatorial Chemistry. The parties agree
that on a case by case basis, Bayer may make a
written request to purchase and/or license a piece of
equipment used within the Research Program. In the
event that Symyx receives such a request and may
license and/or sell such equipment without violating
any obligations Symyx may have to third parties,
Symyx agrees for a period of ninety (90) days after
receipt of such notice to negotiate the terms and
conditions of such a sale and/or license including,
when applicable, Symyx resources needed to assemble
such equipment. It is understood and agreed that
neither Symyx nor Bayer is obligated to accept or
agree upon the terms of such a proposed sale and/or
license. The transfer of equipment and/or technology
contained in such a license will include terms for
training and transfer of know-how necessary to
operate the equipment. In addition, it is understood
that Symyx has, at its own expense, been developing
and intends to continue to develop [******]
(collectively, the "Discovery Tools"), and that Symyx
will offer some or all of these Discovery Tools to
Bayer and/or Bayer Affiliates, either through sale of
equipment and supplies and/or licenses to
intellectual property or some other means selected at
Symyx's discretion. Symyx agrees to negotiate in good
faith with Bayer to enter into a written agreement
setting forth mutually agreeable terms and conditions
on which Symyx will license and/or sell Discovery
Tools on a non-exclusive basis. It is understood and
agreed that the terms for sale of Discovery Tools by
Symyx to Bayer are to be mutually agreed in writing
and this Agreement does not itself obligate Symyx to
sell or Bayer to purchase such Discovery Tools, or
obligate either Symyx or Bayer to accept or agree to
terms and conditions of any such sale and/or license.
5.6.2 [******]
11. Section 5.1 is amended by addition of the following new Section 5.1.4:
5.1.4 [******]
12. Section 6.2.1 is amended by the addition of new Section 6.2.1(c) as
follows:
(c) [******]
13. Article 6 is amended by the addition of new Section 6.15:
6.15 Royalties for [******] Field.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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<PAGE> 6
(a) The parties agree the royalty model set forth in
Section 6.3 shall apply to the [******] Field, and
the parties shall determine the applicable Added
Value Royalty Rate in accordance with Section 6.3.3
(b) [******]
14. Article 6 is amended by the addition of new Section 6.16:
6.16 [******]
16. Article 6 is amended by the addition of new Section 6.17:
6.17 Special Bayer Compounds. In the event Bayer wishes to include
a compound identified by Bayer independently into a Field
within the Research Program ("Special Bayer Compound"), Bayer
shall notify Symyx in writing without revealing the identity
of the compound. In the event that Symyx receives such
notification, Symyx agrees for a period of ninety (90) days
after receipt of such notice to negotiate special royalty
terms and conditions applicable only to the Special Bayer
Compound under which Bayer would agree to include the Special
Bayer Compound within the appropriate Field of the Research
Program. It is understood and agreed that neither Symyx nor
Bayer is obligated to accept or agree upon the terms of such a
proposed royalty readjustment and the parties must agree in
writing before a Special Bayer Compound is included in the
Research Program. This procedure will be followed on a
case-by-case basis.
17. Exhibit E attached to this Amendment No. 3 is hereby incorporated into
the Collaboration Agreement as Exhibit E.
18. Except as specifically modified or amended hereby, the Collaboration
Agreement, as modified or amended by Amendment No. 1 to Collaboration
Agreement and Amendment No. 2 to Collaboration Agreement, shall remain
in full force and effect and, as modified or amended, is hereby
ratified, confirmed and approved. No provision of this Amendment No. 3
may be modified or amended except expressly in a writing signed by both
parties nor shall any terms be waived except expressly in a writing
signed by the party charged therewith. This Amendment No. 3 shall be
governed in accordance with the laws of the State of California,
without regard to principles of conflicts of laws.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
SYMYX CONFIDENTIAL
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IN WITNESS WHEREOF, each of the parties has executed this Amendment No. 3 as of
the date indicated on this Amendment No. 3.
BAYER AG SYMYX TECHNOLOGIES
By: /s/ RUDOLF CASPER /s/ ISY GOLDWASSER
--------------------------------- ------------------------------
Name: Prof. Dr. Casper Isy Goldwasser
--------------------------------- ------------------------------
Title: President & COO
--------------------------------- ------------------------------
Date: March 5, 1999 March 2, 1999
--------------------------------- ------------------------------
By: /s/ H.J. ROSENKRANZ
---------------------------------
Name: Prof. Dr. Hans-Juergen Rosenkranz
---------------------------------
Title: Head of Central Research
---------------------------------
Date: March 5, 1999
---------------------------------
SYMYX CONFIDENTIAL
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EXHIBIT 10.8(d)
AMENDMENT NO. 4 TO COLLABORATION AGREEMENT
BAYER AG - SYMYX TECHNOLOGIES
This Amendment No. 4 to Collaboration Agreement (the "Fourth
Amendment"), effective as of September 15, 1999, is entered into by and between
Symyx Technologies ("Symyx"), a Delaware corporation having a principal place of
business at 3100 Central Expressway, Santa Clara, California 95051 ("Symyx"),
and Bayer AG, a German corporation, having a principal place of business at
D-51368 Leverkusen, Germany, and amends that certain Collaboration Agreement
entered into by and between Symyx and Bayer effective as of March 1, 1998, as
previously amended by Amendment No 1 to Collaboration Agreement effective as of
May 1, 1998, Amendment No. 2 to Collaboration Agreement effective as of November
1, 1998 and Amendment No. 3 to Collaboration Agreement effective as of January
1, 1999 (the "Collaboration Agreement").
WHEREAS, Symyx and Bayer desire to amend the Collaboration Agreement to
provide for continuation of the Research Program in [******];
NOW THEREFORE, the parties hereby agree as follows:
1. All capitalized terms not defined in this Fourth Amendment shall have
the meanings given to them in the Collaboration Agreement.
2. Section 2.2.1(b) is amended to read in its entirety as follows:
(b) [******]
3. Section 2.2 is amended by addition of the following new Section 2.2.6:
2.2.6 [******]
4. Section 2.4 is amended to read in its entirety as follows:
2.4 Research Program Term
2.4.1 Initial Term.
(a) [******]
(b) [******]
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2.4.2 [******]
5. Section 6.2.1 is amended by the addition of the following new Section
6.2.1(d):
(d) [******]
6. Except as specifically modified or amended hereby, the Collaboration
Agreement, as modified or amended by Amendment No. 1 to Collaboration
Agreement, Amendment No. 2 to Collaboration Agreement and Amendment No.
3 to Collaboration Agreement, shall remain in full force and effect and,
as modified or amended, is hereby ratified, confirmed and approved. No
provision of this Fourth Amendment may be modified or amended except
expressly in a writing signed by both parties nor shall any terms be
waived except expressly in a writing signed by the party charged
therewith. This Fourth Amendment shall be governed by, construed and
enforced in accordance with the laws of the State of California, without
reference to conflicts of laws principles.
IN WITNESS WHEREOF, each of the parties has executed this Fourth
Amendment as of the date indicated in the initial paragraph of this Fourth
Amendment.
BAYER AG SYMYX TECHNOLOGIES
By: /s/ H.J. ROSENKRANZ By: /s/ ISY GOLDWASSER
------------------------ ------------------------
Name: Prof. Dr. H.J. Rosenkranz Name: Isy Goldwasser
------------------------ ------------------------
Title: Head of Central Research Title: President & COO
------------------------ ------------------------
Date: 1999-09-13 Date: 9/15/99
------------------------ ------------------------
By: /s/ I.V. Kopp
-------------------------
Name: Dr. Kopp
-------------------------
Title: Manager Patents and Licensing
------------------------------
Date: September 13, 1999
----------------------------
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<PAGE> 3
EXHIBIT E
[******]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 1
EXHIBIT 10.9
CELANESE-SYMYX COLLABORATION AGREEMENT
This COLLABORATION AGREEMENT (the "Agreement"), effective as of August
1, 1998 (the "Effective Date"), is made by and between Symyx Technologies, Inc.,
a California corporation, having a principal place of business at 420 Oakmead
Parkway, Sunnyvale, California 94086 ("Symyx"), and Celanese Ltd., having a
principal place of business at 1601 West LBJ Freeway, Dallas, Texas 75234
("Celanese").
BACKGROUND
A. Symyx owns and is developing novel, proprietary methods for the
combinatorial preparation and screening of novel materials;
B. Symyx entered into a Collaboration Agreement dated May 1, 1997
("CA1") with Corporate Research & Technology of Hoechst AG, now
known as Aventis Research & Technology ("AR&T"), which agreement
reflected their mutual desire to collaborate to conduct
materials discovery research and development focused on the
discovery and enhancement of [******]
C. AR&T and Celanese, both wholly owned directly or indirectly by
Hoechst AG, have agreed to divide among themselves the rights
and obligations originally assumed by AR&T in CA1;
D. Symyx desires to collaborate with Celanese and is willing for
Celanese and AR&T to divide among them the rights and obligation
of AR&T in CA1; and
E. Concurrently with the execution of this Agreement, Symyx and
AR&T have entered into an amendment of CA1 for the purpose of
permitting Symyx to enter into this Agreement and convey to
Celanese certain rights and licenses granted herein on the terms
and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions
and undertakings set forth herein, it is agreed by and between the parties as
follows:
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ARTICLE 1
DEFINITIONS
As used in this Agreement, the terms set forth in Exhibit A hereto will
have the meanings set forth therein.
ARTICLE 2
RESEARCH PROGRAM
2.1 Research Activities. The parties shall conduct collaborative
research in connection with the Research Program.
2.1.1 Collaborative Research. The parties intend to conduct the
Research Program on a collaborative basis, and to cooperate to identify Lead
Compounds in the Active Projects.
2.1.2 Symyx Responsibilities. During the term of the Research
Program Symyx shall use its reasonable efforts to identify Lead Compounds in
Active Projects. In this regard, Symyx will prepare and screen Libraries in the
Research Program, one or more of which Libraries may be prepared by Symyx
outside the Research Program and, at Celanese's request, shall provide to
Celanese gram size samples of any Lead Compound, at no additional charge. Symyx
will use commercially reasonable efforts to provide ten (10) gram size samples;
however, if such sample cannot be provided at a commercially reasonable cost,
Symyx will so notify Celanese and the parties shall meet to discuss how to
proceed. Symyx shall keep the Research Field Committee ("RFC", as defined
hereafter, Section 3.2.1) responsible for a particular Active Field fully
informed of its activities in respect of each Active Project within such Active
Field. It is understood that the Libraries are regularly used by Symyx and,
subject to the rights granted to Celanese under this Agreement, that Symyx can
use and screen the Libraries for any use on its own behalf or for third parties.
2.1.3 Celanese Responsibilities. Celanese shall use reasonable
efforts, to provide Symyx with support and assistance useful or necessary for
the conduct of the Research Program. Celanese shall keep the RFC responsible for
an Active Project apprised of the progress and technical issues relating to the
development of Agreement Compounds and commercialization of Products resulting
from such Active Project.
As used herein, Agreement Compound shall mean any Lead Compound [******]
As used herein, Product shall mean any product which (i) incorporates an
Agreement Compound, or (ii) utilizes an Agreement Compound in its
manufacture, or (iii) is made utilizing a patentable method or
patentable process within the Program Technology as to which Symyx has
an interest.
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2.2 Active Fields.
2.2.1 (a) Initial Active Fields. The Research Program shall
initially include only research activities related to the Celanese Group.
(b) [******]
As used herein Field Minimum Term shall mean with respect to any Active
Field, the minimum time required to conduct a comprehensive evaluation
of the utility of combinatorial technologies within such Active Field,
as established by the Executive Committee or as expressly set forth
herein.
2.2.2 Active Field Exclusivity.
(a) Subject to Celanese's continuing payment to Symyx of
the Field Minimum Funding payments for the applicable Active Field, Symyx will
not conduct research on any Active Project or Inactive Project within such
Active Field for any third party or on its own behalf other than under this
Agreement.
(b) [******]
(c) [******]
2.2.3 Field Reactivation.
(a) [******].
(b) [******]
2.3 Inactive Fields.
2.3.1 [******]
2.3.4 [******]
2.3.5 Loss of Inactive Field Exclusivity.
(a) [******]
(b) [******]
2.3.6 Activation of Inactive Field. The Executive Committee (as
defined hereafter, Section 3.1.1) shall determine whether to activate any
Inactive Field and convert it into
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<PAGE> 4
an Active Field. At such time as the Executive Committee determines that an
Inactive Field should be pursued in the Research Program, it shall activate such
field substantially in accordance with Exhibit C on terms substantially
identical to existing Active Fields.
2.3.7 Adding Inactive Fields. In the event that Celanese wishes
to propose as additional potential Inactive Fields other areas for inclusion on
Exhibits D or E, Symyx agrees to consider such proposals in good faith.
2.4 Projects.
2.4.1 Identification of Lead Compounds. The procedure for the
identification of Lead Compounds by Symyx is set forth on Exhibit B hereto.
2.4.2 Inactive Projects. Inactive Projects may be activated by
Celanese or the RFC for a particular Active Field as set forth on Exhibit C
hereto.
2.4.3 Termination of Active Projects.
(a) RFC. The RFC for a particular Active Field may
recommend to the EC that the research activities with respect to a particular
Active Project should be terminated. If the EC approves such a termination, the
RFC for the applicable Active Field shall rebudget all remaining Active Projects
within the Active Field. Any Active Project terminated by the applicable RFC
shall be deemed an Inactive Project.
(b) Celanese. In the event that the RFC fails to agree
to terminate a particular Active Project, during the period that Celanese is
paying Field Minimum Funding for the applicable Active Field, Celanese has the
right to terminate any Active Project within such Active Field. In any such
event, promptly following Celanese's notice that it intends to terminate a
particular Active Project, the RFC for the applicable Active Field shall
rebudget all remaining Active Projects within the Active Field. Symyx shall use
reasonable efforts to cease research with respect to such Active Project as soon
as practicable.
2.5 Records; Inspection
(a) Research Program. Symyx and Celanese shall maintain records
of the Research Program (or cause such records to be maintained) in sufficient
detail and in good scientific manner as will properly reflect all work done and
results achieved in the performance of the Research Program (including
information sufficient to establish dates of conception and reduction to
practice of inventions).
(b) Research Program Expenditures. Symyx shall keep complete,
true and accurate books of account and records for the purpose of determining
Symyx's Research Expenses incurred in connection with the performance of the
Research Program. Symyx shall
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<PAGE> 5
make quarterly written reports to the EC with regard to all Research Expenses
expended in a particular quarter, by Active Field, within ninety (90) days after
the end of such calendar quarter. Such books and records shall be kept at the
principal place of business of Symyx for at least two (2) years following the
end of each calendar year. Such records will be open for inspection during such
two (2) year period, by an independent auditor of Celanese, for the purpose of
verifying the financial reports submitted by Symyx. Such inspections may be made
no more than once each calendar year, at reasonable times mutually agreed by
Symyx and Celanese. Celanese's auditor will be obliged to execute a reasonable
confidentiality agreement prior to commencing any such inspection.
2.6 Post-Research Program Activities. Celanese shall, at Celanese's or
its Sublicensees' expense, be responsible, on a Lead Compound-by-Lead Compound
basis, for conducting all development of Agreement Compounds and Products
following the commencement of Celanese's internal analysis with respect to a
particular Lead Compound, and all commercialization of Products to which
Celanese retains rights under this Agreement.
2.7 Limited Activities
2.7.1 Active Projects. [******]
(a) [******]
(b) [******]
2.7.2 Exclusive Commercial Development by Celanese. In the event
that Celanese is diligently developing a particular Agreement Compound or
commercializing a particular Product or otherwise retaining exclusive rights to
such Agreement Compound or Product as provided in Article 4 and Sections 7.1,
7.1.1, 7.2.1 or 7.2.2, Symyx shall not enter into an agreement with a third
party, or conduct any activity on its own behalf or on behalf of a third party,
where such agreement or activity has the purpose of developing products which
compete in the same primary market, for the same end use and for at least some
of the same customers as such Agreement Compound or Product.
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the omitted portions.
<PAGE> 6
ARTICLE 3
MANAGEMENT
3.1 Executive Committee.
3.1.1 Responsibility. Symyx and Celanese shall establish an
Executive Committee (the "EC") to (i) oversee the direction of the overall
relationship between Symyx and Celanese, (ii) activate and terminate Fields and
Projects within such Fields including establishing Field and/or Product Group
Definitions, (iii) approve budgets for Active Projects (including without
limitation, any capital expenditures or other expenses (e.g., payments to third
parties for licenses from third parties) necessary to conduct such Active
Projects), and (iv) resolve any issues which a RFC is unable to resolve. The EC
shall have the authority, but not the obligation, to convert one or more
Inactive Fields into Active Fields.
3.1.2 Membership. The EC is comprised of an equal number of
representatives from each of Celanese and Symyx, with each party's
representatives selected by the party. Either party may replace their respective
EC members at any time, upon written notice to the other party.
3.1.3 Meetings. EC shall meet at least twice per year at
locations agreed by the parties. With the consent of the parties, other
representatives of Symyx or Celanese may attend EC meetings as nonvoting
observers. Each party shall be responsible for all of its own expenses
associated with attendance of such meetings. EC members may participate in any
such meeting in person, by telephone, or by televideo conference. Symyx shall
prepare minutes of each EC meeting, which minutes shall be approved and signed
by EC representatives of each party.
3.1.4 Decision Making. A quorum of the EC shall require a
majority of the members of the EC, including at least one member representing
Celanese and one representing Symyx. Decisions of the EC shall be made by
unanimous approval. In the event the EC is unable to resolve an issue, it will
be referred to the President of Celanese and the Chairman of the Board of Symyx
for resolution, and such persons shall meet to discuss such matter within thirty
(30) days. Any matter such persons are unable to resolve will be submitted to
binding arbitration pursuant to Section 14.12.
3.2 Research Field Committees.
3.2.1 Responsibilities. Celanese and Symyx will establish a
Research Field Committee ("RFC") to oversee, review and recommend direction of
each Active Field. The responsibilities of each Research Field Committee shall
include: (i) establishing the criteria for a Lead Compound, (ii) monitoring and
reporting research progress for the Active Field for which it is responsible,
and ensuring open exchange between both parties regarding such Active Projects,
(iii) preparing and prioritizing lists of Inactive Projects for the Active
Field, (iv) making recommendations regarding the activation of Inactive Projects
within the Active Field,
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(v) making recommendations regarding the approval of Project Plans, and the
approval of budgets for Active Projects, (vi) coordinating all patent activities
in accordance with Article 8 hereof, (vii) determining if any Active Project has
been successfully concluded and become a finished project, and (viii)
determining the specific criteria for demonstrating Proof of Principle for the
Active Field.
3.2.2 Membership. Each RFC shall include an equal number of
representatives of each of Celanese and Symyx, up to three (3) persons from each
party, each party's representatives selected by that party. Symyx and Celanese
may each replace its RFC representatives at any time, upon written notice to the
other party. Each RFC shall be chaired as agreed by the parties. From time to
time, the RFC may establish subcommittees, such as a Patent Committee, to
oversee particular projects or activities, and such subcommittees will be
constituted as the RFC agrees.
3.2.3 Meetings. During the term of the applicable Active
Project, each RFC shall meet quarterly at regular intervals, or more frequently
as agreed by the parties, at such locations as the parties agree. With the
consent of the parties, other representatives of Symyx or Celanese may attend
RFC meetings as nonvoting observers. Each party shall be responsible for all of
its own expenses associated with attendance of such meetings. RFC members may
participate in any such meeting in person, by telephone, or by televideo
conference. Symyx shall prepare minutes of each RFC meeting, which minutes shall
be approved and signed by RFC representatives of each party.
3.2.4 Decision Making. A quorum of the RFC shall require a
majority of the members of the RFC, including at least one member representing
Celanese and one representing Symyx. Decisions of each RFC shall be made by
unanimous approval. In the event that unanimous agreement on any matter is not
achieved within the RFC, the matter will be referred to the EC for resolution.
ARTICLE 4
LICENSES
4.1 License; Option
4.1.1 Exclusive License Grant to Celanese. Symyx agrees to grant
and does hereby grant to Celanese an exclusive, worldwide, royalty-bearing
license, with unrestricted right of sublicense, to Symyx's interest in Agreement
Compounds and Program Technology (excluding any CC Technology) for purposes of
commercializing, including all associated activities, any and all Products which
result from the conduct of, and are within the scope of, an Active Project. At
such time as Celanese's exclusivity for a particular Active Field terminates,
the licenses granted above shall continue in full force and effect.
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4.1.2 [******]
(a) [******]
(b) [******]
4.1.3 Initial Product Group Definitions. The Product Group
Definition as of the Effective Date of this Agreement is the Celanese Group
definition.
4.2 Nonexclusive License Grant to Celanese. Symyx agrees to grant and
does hereby grant to Celanese a non-exclusive, worldwide, royalty-free license,
with the right of sublicense, as to any patent rights within the Symyx
Technology or Program Technology described in the following sentence, in each
case, solely to the extent such license is necessary to enable Celanese or its
Sublicensee to exercise the rights and privileges granted in Sections 4.1.1 and
4.1.2. Such license shall extend to any Symyx Technology or Program Technology
owned or controlled by Symyx as of the Effective Date, and to the extent that
Symyx has the right to grant such rights, to any such Symyx Technology or
Program Technology owned or controlled by Symyx after the Effective Date.
4.3 Sublicensees. Celanese shall provide Symyx with at least the
following information with respect to each of Celanese's sublicensees:
(a) the identity of such Sublicensee;
(b) a description of the rights granted including scope as to
both subject matter and territory; and
(c) a description of the information and materials furnished
each sublicensee to the extent such items relate to this Agreement.
Each sublicense granted by Celanese shall be written and shall be and
consistent with all the terms and conditions of this Agreement and subordinate
thereto. Celanese shall remain responsible to Symyx for the compliance of each
Sublicensee with the financial and other obligations due under this Agreement.
Notwithstanding the above, such sublicenses may impose financial obligations on
such sublicensee different than those imposed on Celanese herein. No sublicense
granted by Celanese may be further assigned or further transferred by any
sublicensee without the prior written consent of Symyx, which consent shall not
be unreasonably withheld; provided, any such a sublicense may be further
assigned by a Sublicensee without the consent of Symyx in connection with a
transfer of substantially all the business of such Sublicensee to which such
sublicense relates.
4.4 Permitted Uses. Celanese further agrees not to use or commercialize
Agreement Compounds, except as licensed under Section 4.1.1 or 4.1.2 of this
Agreement, or as licensed under a separate agreement between the parties.
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4.5 Research License. Notwithstanding Section 4.1 above, Symyx shall
retain the right to make, have made and use all library compounds for its own
research purposes (i.e., to develop, improve and validate its technology and
intellectual property). However, if such research would adversely affect
Celanese's exclusive rights under this Agreement, Symyx shall not conduct such
research or have such research conducted on its behalf.
4.6 Third Party Rights. It is understood that Symyx is in the business
of conducting research and development with third parties, and that Symyx will
grant such third parties rights after the Effective Date to acquire licenses for
compounds derived from such libraries similar to Celanese's rights under this
Article 4. It is understood and agreed that, even if Symyx complies with its
obligations under this Agreement, compounds provided to third parties in the
course of Symyx's other business activities may result in third party patent
applications and patents, including patent applications and patents owned by
such third parties, or owned jointly by Symyx and such third parties, which
could conflict with patent applications and patents owned by Celanese, or
jointly owned by Celanese and Symyx hereunder. Symyx shall use reasonable care
to avoid any such conflict and shall at a minimum take the steps enumerated in
Section 4.7.
4.7 No Conflict. During the term of this Agreement Symyx shall not grant
any license which conflicts with the rights granted to Celanese in Sections
4.1.1, 4.1.2 and 4.2 and shall not grant any rights inconsistent with the
exclusive rights set forth in Article 2, including Sections 2.7.1 and 2.7.2.
[******]
4.8 [******]
4.9 Independent Development. Celanese shall notify Symyx within thirty
(30) days following the commencement of the Lead Compound evaluation activity
(or any equivalent process conducted by a third party with access to or
knowledge of any Agreement Compounds, Program Technology or Symyx Technology
under license from Celanese) with respect to any compound, mixture or
composition of matter developed by Celanese within ten (10) years of the
commencement of the Lead Compound evaluation activity with respect to the Lead
Compound or Derivative Compound from which such Agreement Compound was derived,
where such compound, mixture or composition of matter bears a reasonable
relationship to an Agreement Compound on a structural and functional basis. If
Celanese believes any such compound, mixture or composition of matter is not an
Agreement Compound, it shall provide Symyx with a detailed explanation why such
compound, mixture or composition of matter is not an Agreement Compound. In the
event that Celanese fails to notify Symyx within the thirty (30) day period
specified above that it believes any such compound, mixture or composition of
matter is not an Agreement Compound, Celanese shall bear the burden of
establishing that it independently developed such Agreement Compound without any
reference to or use of any Symyx Technology or Program Technology. If a dispute
arises between the parties regarding whether a particular, mixture or
composition of matter compound is an Agreement Compound, the dispute shall be
settled by binding arbitration pursuant to Section 14.12 herein. In any such
arbitration,
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Celanese shall bear the burden of establishing that it independently developed
such Agreement Compound without any reference to or use of any Symyx Technology
or Program Technology. Celanese may demonstrate such independent development
with (i) experimental data showing the compound, mixture or composition of
matter was synthesized and tested by Celanese for the identical use for which it
is being developed, prior to the date of identification of such compound in the
Research Program, or (ii) patents or patent applications which claim such
compound, mixture or composition of matter for the identical use for which it is
being developed, which patent applications or patents were filed by Celanese or
a third party prior to the date of identification of such compound in the
Research Program.
4.10 CA1; Coordination of AR&T Rights.
4.10.1 [******]
4.10.2 [******]
ARTICLE 5
PAYMENTS
5.1 Research Program Payments. Celanese agrees to pay to Symyx Research
Expenses for the conduct of the Research Program, in a total not less than the
Field Minimum Funding for all Active Fields. [******]
5.1.1 Field Minimum Funding.
(a) [******]
(b) [******]
(c) Modifications. The Field Minimum Funding amounts in
this Section 5.1.1 may only be changed with unanimous approval of the EC.
5.1.2 Reconciliation. Symyx shall endeavor to expend Research
Expenses in the quarter for which they are paid. In the event the Research
Expenses budgeted and paid by Celanese for any quarter for a particular Active
Field are not expended on such Active Field during that quarter, the remainder
shall be carried forward and may be expended on the Active Field during the
subsequent periods. Notwithstanding the above, in the event that five hundred
thousand dollars ($500,000) or more in Research Expenses remains unexpended at
the end of any quarter, then Symyx shall notify the EC and the EC shall
determine how future Research Expense payments shall be adjusted so that the
aggregate unexpended amount of Research Expense payments will be reduced to less
than five hundred thousand dollars ($500,000) in the next quarter. In the event
of a dispute regarding Symyx's expenditure of Research Expenses
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provided by Celanese for a particular Active Field, Celanese may, with notice to
Symyx, limit its Research Expenses for such Active Field to the applicable Field
Minimum Funding until such dispute is resolved pursuant to arbitration;
provided, in such event Symyx shall have no obligation to conduct any research
activities in connection with such Active Field which cannot be fully supported
by such Field Minimum Funding.
5.1.3 Quarterly Payments. Celanese will make payments for the
Research Program equal to the greater of (i) the total Field Minimum Funding for
all Active Fields, or (ii) the budgeted Research Expenses approved by the EC.
The amounts to be paid in connection with the Research Program with respect to
each twelve (12) month period shall be paid quarterly in advance. The initial
payment was made under the CA1 on or about February 1, 1997, and payments under
this Agreement shall be made on or before the applicable quarterly anniversaries
of that date. All such payments are non-refundable.
5.2 Royalties.
5.2.1 [******]
5.2.2 [******]
5.2.3 Royalty Term. Celanese's obligation to pay royalties to
Symyx shall continue for each Product until the later of (i) twelve (12) years
after the first commercial sale of such Product, or (ii) the expiration of the
last to expire issued patent covering such Product within the Program
Technology, or the Celanese Technology described in subsections 1.5(i) or (iii).
Notwithstanding any other provision of this Agreement, all royalty obligations
of Celanese or its sublicensee for a particular Product shall cease twenty (20)
years from the date of the first commercial sale of such Product.
5.2.4 Fully-Paid Licenses. Upon expiration of the royalty
obligations with respect to a particular Product, Celanese shall retain fully
paid licenses under the intellectual property licensed in Section 4.1.1 for the
sole purpose of continued manufacture and sale of such Product.
5.2.5 Third Party Royalties. Celanese is responsible for all
payments due to third parties for the manufacture, sale, or use of Products by
Celanese, its Affiliates or Sublicensees.
5.2.6 Competing Products. If a third party commercializes a
product which incorporates or is made using a compound, which would be a
Derivative Compound under the terms of this Agreement if developed by Celanese
or its designee, and such product is competitive with a Product subject to this
Agreement which incorporates or is made using a Derivative Compound, Celanese
may notify Symyx, and in such event, the parties agree to renegotiate in good
faith the royalty due from Celanese to Symyx with respect to such Product. In
any such negotiation, the parties shall consider relevant factors, including,
without limitation,
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(i) the principles set forth in Section 5.2.1 (i), and (ii) the commercial
impact of the competing product on the relevant Product.
ARTICLE 6
PAYMENTS; BOOKS AND RECORDS
6.1 Royalty Reports and Payments. After the first commercial sale of a
Product on which royalties are payable by Celanese or its Sublicensees
hereunder, Celanese shall make quarterly written reports to Symyx within ninety
(90) days after the end of each calendar quarter, stating in each such report,
separately for Celanese and each Sublicensee, the number, description, and
aggregate Net Sales of each Product sold during the calendar quarter upon which
a royalty is payable under Section 5.2.1 above. Concurrently with the making of
such reports, Celanese shall pay to Symyx royalties due at the rates specified
in such Sections.
6.2 Payment Method. All payments due under this Agreement shall be made
by bank wire transfer in immediately available funds to a bank account
designated by Symyx. All payments hereunder shall be made in U.S. dollars. In
the event that the due date of any payment subject to Article 6 hereof is a
Saturday, Sunday or national holiday, such payment may be paid on the following
business day. Any payments that are not paid within ten (10) days of the date
such payments are due under this Agreement shall bear interest to the extent
permitted by applicable law at the prime rate (as reported by the Bank of
America, San Francisco, California, or successor company, on the date such
payment is due) plus an additional two percent (2%), calculated on the number of
days such payment is delinquent.
6.3 Place of Royalty Payment and Currency Conversions. If any currency
conversion shall be required in connection with the calculation of royalties
hereunder, such conversion shall be made using the selling exchange rate for
conversion of the foreign currency into U.S. Dollars, quoted for current
transactions reported in The Wall Street Journal for the last business day of
the calendar quarter to which such payment pertains.
6.4 Records; Inspection. Celanese and its Sublicensees shall keep
complete, true and accurate books of account and records for the purpose of
determining the royalty amounts payable under this Agreement. Such books and
records shall be kept at the principal place of business of such party, as the
case may be , for at least two (2) years following the end of the calendar
quarter to which they pertain. Such records will be open for inspection during
such two (2) year period by a public accounting firm to whom Celanese has no
reasonable objection, solely for the purpose of verifying royalty statements
hereunder. Such inspections may be made no more than once each calendar year, at
reasonable times and on reasonable notice. Inspections conducted under this
Section 6.4 shall be at the expense of Symyx, unless a variation or error
producing an increase exceeding five percent (5%) of the amount stated for any
period covered by the inspection is established in the course of any such
inspection, whereupon all reasonable costs relating to the inspection for such
period and any unpaid amounts that are discovered will
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be paid promptly by Celanese together with interest thereon from the date such
payments were due at the prime rate (as reported by the Bank of America, San
Francisco, California, or successor company), plus an additional two percent
(2%) per annum. Symyx agrees to hold in strict confidence all information
concerning royalty payments and reports, and all information learned in the
course of any audit or inspection, except to the extent necessary for Symyx to
reveal such information in order to enforce its rights under this Agreement or
if disclosure is required by law. The public accounting firm employees shall
sign a customary confidentiality agreement as a condition precedent to their
inspection, and shall report to Symyx only that information which would be
contained in a properly prepared royalty report by Celanese.
6.5 Tax Matters. All royalty amounts and other payments required to be
paid to Symyx pursuant to this Agreement shall be paid with deduction for
withholding for or on account of any taxes (other than taxes imposed on or
measured by net income) or similar governmental charge imposed by a jurisdiction
other than the United States ("Withholding Taxes") to the extent Symyx and/or
its Affiliates or their successors has the lawful rights to utilize the
Withholding Taxes paid by Celanese as a credit against Symyx's and/or its
Affiliates regular U.S. tax liability. Celanese shall provide Symyx a
certificate evidencing payment of any Withholding Taxes hereunder.
ARTICLE 7
DUE DILIGENCE
7.1 Due Diligence. Celanese shall use reasonable and diligent efforts,
on an Agreement Compound-by-Agreement Compound and Product-by-Product basis, to
develop and commercialize Products. The following parameters shall be used to
evaluate Celanese's diligence prior to the commencement of commercialization.
7.1.1 Lead Compound Validation Activity.
(a) Within six (6) months of having a sufficient
quantity to test, Celanese will confirm whether or not the Lead Compound meets
the criteria set by the RFC and shall notify Symyx if such Lead Compound is of
sufficient interest to warrant consideration of Celanese starting an expanded
evaluation project (such notice referred to as a "Validation Notice"); provided,
Celanese shall have no obligation within any twelve (12) month period to perform
such validation activity for more than eight (8) Agreement Compounds provided by
Symyx, with a minimum of one Agreement Compound in each Active Project for which
Symyx provides a potential Lead Compound.
(b) If Celanese validates that a Lead Compound meets
Celanese's criteria, then it must proceed with its expanded evaluation activity
within six (6) months of such a determination, except as provided in 7.1.1(a) or
in Section 7.2.1 below.
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7.1.2 Lead Compound Evaluation Activity. Celanese commits to
evaluate and develop Lead Compounds that are judged to meet the established
criteria, or for which Celanese sends a Validation Notice, with the same
diligence and discipline as other projects that are active within Celanese's
research centers.
7.2 Lack of Diligence.
7.2.1 Exceptions. Celanese may elect not to develop a particular
Agreement Compound (i.e., may (i) not commence the Lead Compound evaluation
activity with respect to such Agreement Compound, or (ii) drop such Agreement
Compound from the Lead Compound evaluation activity), if:
(a) [******]
(b) [******]
(c) [******]
(d) [******]
(e) [******]
7.2.2 [******]
7.3 Reports. During the term of this Agreement, Celanese shall provide
Symyx with written quarterly reports within thirty (30) days of the end of each
six (6) month period providing at least the following information, (i)
description of the status of the research and development activities conducted
with respect to each Agreement Compound; and (ii) the status of all patent
applications claiming such Agreement Compounds. The reports as described in this
Section shall contain sufficient information to allow Symyx to monitor
Celanese's compliance with this Agreement. Until first commercial introduction
of each royalty-bearing Product, Celanese shall keep Symyx apprised of the
status of the commercial development of all such Products by semi-annually
providing Symyx with a written report detailing such activities with respect to
each such Product during the term of this Agreement. All reports and information
provided under this Section 7.3 shall be deemed Confidential Information of
Celanese.
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ARTICLE 8
INTELLECTUAL PROPERTY
8.1 Ownership of Inventions.
8.1.1 Research Program. Title to all inventions and other
intellectual property made by employees of Celanese, but not Symyx, in the
course of and in connection with the Research Program ("Celanese Inventions")
shall be deemed owned by Celanese. Title to all inventions and other
intellectual property made solely by employees of Symyx, but not Celanese, in
the course of an in connection with the Research Program ("Symyx Inventions")
shall be deemed owned by Symyx. Title to all inventions and other intellectual
property made jointly by employees of Celanese and Symyx in the course of and in
connection with the Research Program ("Joint Inventions") shall be deemed owned
jointly by Symyx and Celanese.
8.1.2 Law. Inventorship of inventions and other intellectual
property rights conceived and/or reduced to practice pursuant to this Agreement,
and rights of ownership with respect thereto, shall be determined in accordance
with U.S. patent laws.
8.1.3 Reserved Rights. Symyx shall not have any right to
combinatorial technologies developed by Celanese outside the Research Program,
and Celanese shall not have any obligation to disclose the same to Symyx.
Celanese shall not have any right in or to any Symyx Technology or any
intellectual property developed by Symyx outside the Research Program, except as
expressly set forth in this Agreement, and Symyx shall not have any obligation
to disclose the same to Celanese.
8.1.4 CC Technology. Article 10 below contains those terms and
conditions which relate specifically to inventions relating to Combinatorial
Chemistry ("CC") Technology made by the parties during the term of the Research
Program and for one year thereafter.
8.2 Notice of Inventions. Symyx and Celanese shall report to the RFC of
each Active Field any inventions relating to Lead Compounds or Program
Technology made in the conduct of the Research Program.
8.3 Patent Prosecution.
8.3.1 Responsibilities.
(a) Symyx Inventions. Symyx shall have the first right
to be responsible for preparing, filing, prosecuting and maintaining patent
applications and patents relating to Symyx Inventions included within the
Program Technology, and conducting any interferences, re-examinations, reissues
and oppositions relating to such patent applications and patents, as it deems
appropriate, at Symyx's expense; provided, however, that if Symyx elects not to
conduct any or all such activities, then Symyx shall allow Celanese, in its
discretion and at
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its expense, to conduct the activities that Symyx has elected not to conduct, in
which event Celanese shall conduct such activities with patent counsel
reasonably acceptable to Symyx and Celanese.
(b) Joint Inventions.
(i) The parties will cooperate to file,
prosecute and maintain patent applications covering the Joint Invention(s) in
countries agreed by the parties. The parties shall agree which parties shall be
responsible for conducting such activities with respect to a particular Joint
Invention. Subject to Section 8.3.1(b)(ii) below, the parties will share equally
all expenses and fees associated with the filing, prosecution, issuance and
maintenance of any patent application and resulting patent for a Joint Invention
in the agreed countries.
(ii) In the event that either party wishes to
seek patent protection with respect to any Joint Invention in a country the
other is not interested in pursuing patent protection, it shall notify the other
party hereto. The party wishing to seek patent protection with respect to such
Joint Invention in such country or countries, may file, prosecute and maintain
patent applications and patents with respect thereto, at its own expense.
(c) Celanese Inventions. Celanese shall be responsible,
at its expense, for preparing, filing, prosecuting and maintaining worldwide in
such countries it deems appropriate, patent applications and patents relating to
all Celanese Inventions, and conducting any interferences, re-examinations,
reissues and oppositions relating thereto as it deems appropriate.
8.3.2 Symyx Failure to Prosecute. Symyx may elect upon ninety
(90) days prior notice to discontinue prosecution of any patent applications
filed by Symyx pursuant to Section 8.3.1(a) above and/or not to file or conduct
any further activities with respect to the patent applications or patents
subject to such Section. In the event Symyx declines to file or, having filed,
fails to further prosecute or maintain any patent applications or patents
described herein, conduct any proceedings including, but not limited to,
interferences, re-examinations, reissues, oppositions relating thereto, then,
subject to Symyx's agreements with third parties, Celanese shall have the right
to prepare, file, prosecute and maintain such patent applications and patents in
such countries worldwide it deems appropriate, and conduct such proceedings at
its sole expense, and shall consult with Symyx in connection with all such
activities. In such case, Symyx shall immediately execute all necessary
documents that may be required in order to enable Celanese to file, prosecute
and maintain such patent application and to conduct any such proceedings.
8.4 Cooperation. Each of Celanese and Symyx shall keep the other fully
informed as to the status of patent matters described in this Article 8,
including without limitation, by providing the other the opportunity to fully
review and comment on any documents as far in advance as possible of filing
dates and prosecution deadlines, and providing the other copies of
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any substantive documents that such party receives from such patent offices
promptly after receipt, including notice of all official actions, interferences,
reissues, re-examinations, oppositions, potential litigation, or requests for
patent term extensions. Celanese and Symyx shall each reasonably cooperate with
and assist the other at its own expense in connection with such activities, at
the other party's request.
8.5 Copies. Celanese shall promptly provide to Symyx a copy of any
patent applications filed by Celanese and its Affiliates which are Sublicensees
after the publication thereof during the term of this Agreement with respect to
any Program Technology, including without limitation, Agreement compounds. Symyx
shall promptly provide to Celanese a copy of any patent applications filed by
Symyx after the publication thereof during the term of this Agreement relating
to any Program Technology, including without limitation, Agreement Compounds.
8.6 Notice. Symyx shall give Celanese immediate notice of any claim of
patent infringement or trade secret misappropriation it may receive which in any
way relates to this Agreement.
8.7 Enforcement and Defense.
8.7.1 Enforcement. Each party shall promptly notify the other of
its knowledge of any potential infringement of the Program Technology by a third
party.
(a) If such infringement relates to a Product subject to
this Agreement, the parties shall be entitled jointly bring legal action
necessary to enforce patents claiming Symyx Inventions and Joint Inventions
against such infringement, unless Symyx reasonably believes that joint
enforcement with respect to any patent claiming a Symyx Invention could have an
adverse impact on Symyx, in which case Symyx shall have the sole right to bring
legal action to enforce such patent. If the parties agree to jointly bring
action to abate such infringement, the parties shall share the expenses
(including without limitation attorneys' and experts' fees) incurred in
connection with such action, with Symyx paying one-quarter (1/4) of such
expenses and Celanese paying three-quarters (3/4) of such expenses. Any recovery
by the parties in any such action shall be shared as follows: first, each party
shall recover its expenses incurred in such action, and then the remainder shall
be shared by the parties with Celanese receiving three-quarters (3/4) of such
amount and Symyx receiving one-quarter (1/4) of such amount.
(b) If the parties do not agree to jointly take legal
action within six (6) months of the date that they both have knowledge of the
potential infringement, then Symyx shall have the right, but not the obligation,
to independently take such action to abate such infringement. Symyx shall
control and be responsible for all expenses incurred in connection with such
action and may retain all recoveries related to such action.
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(c) If Symyx fails to commence an independent action to
halt a commercially significant infringement within the period described in
Section 8.7.1(b), then Celanese shall have the right, at its expense, to take
such action. In such event, Celanese will have the right to offset one-half of
the reasonable expenses incurred in connection with such action against
royalties due Symyx with respect to a Product which utilizes the infringed
patent in the affected country, up to one-half of such royalties due in any
year. Any recovery by Celanese in such action shall be divided as follows:
first, Celanese shall recover its reasonable expenses incurred in such an
action, second, Celanese shall reimburse Symyx for any royalties for which
Celanese took an offset, and third, Celanese may retain three-quarters (3/4) of
any remainder and shall pay to Symyx one-quarter (1/4) of such remainder.
(d) If there is an infringement which does not relate to
a Product of a patent covering a Joint Invention, the parties shall discuss
whether to jointly bring an action to abate such infringement. In the event that
the parties do not wish to jointly bring such an action either party may seek to
abate such infringement; provided, in such event, should the alleged third party
infringer assert that one or more of the parties to this Agreement are necessary
or indispensable to such proceedings, the other party hereto agrees to join in
and participate in such proceedings, at the expense of and to the extent
requested by the party initially participating in such suit.
8.7.2 Infringement Claims. If the manufacture, sale or use of
any Product pursuant to this Agreement because of the practice of the Program
Technology or the Celanese Technology results in any claim, suit or proceeding
alleging patent infringement against Symyx or Celanese (or its Sublicensees),
such party shall promptly notify the other party hereto in writing setting forth
the facts of such claims in reasonable detail. The defendant shall have the
exclusive right and obligation to defend and control the defense of any such
claim, suit or proceeding, at its own expense, using counsel of its own choice;
provided, however, it shall not enter into any settlement which admits or
concedes that any aspect of the Celanese Technology (in the case of Symyx) and
the Program Technology (in the case of Celanese) is invalid or unenforceable,
without the prior written consent of such other party. The defendant shall keep
the other party hereto reasonably informed of all material developments in
connection with any such claim, suit or proceeding.
ARTICLE 9
CONFIDENTIALITY
9.1 Confidential Information. Except as otherwise expressly provided
herein, the parties agree that, for ten (10) years from receipt of such
Confidential Information, the receiving party shall not, except as expressly
provided in this Article 9, disclose to any third party or use for any purpose
not permitted by Section 9.2 any confidential information furnished to it by the
disclosing party hereto pursuant to this Agreement ("Confidential Information")
except to the extent that it can be established by the receiving party by
competent proof that such information:
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(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was independently developed by the receiving party as
demonstrated by documented evidence prepared contemporaneously with such
independent development; or
(e) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing party not disclose such information to others.
9.2 Permitted Use and Disclosures. Each party hereto may use or disclose
information disclosed to it by the other party, to the extent such use or
disclosure is reasonably necessary and permitted in the exercise of such rights
granted hereunder in commercializing Products as provided in Article 4, or in
filing or prosecuting patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations or court order or otherwise
submitting information to tax or other governmental authorities, or making a
permitted sublicense or otherwise exercising license rights expressly granted by
the other party pursuant to the terms of this Agreement, provided that if a
party is required to make any such disclosure, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the other
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its reasonable best efforts to secure confidential
treatment of such information in consultation with the other party prior to its
disclosure (whether through protective orders or otherwise) and disclose only
the minimum necessary to comply with such requirements.
9.3 Nondisclosure of Terms. Each of the parties hereto agrees not to
disclose the terms of this Agreement to any third party (other than a parent
company or Affiliate which has agreed to be bound by the confidentiality
provisions of this Agreement) without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld, except to such
party's attorneys, advisors, investors and others on a need to know basis under
circumstances that reasonably ensure the confidentiality thereof, or to the
extent required by law. Notwithstanding the foregoing, the parties shall agree
upon a press release and timing to announce the execution of this Agreement,
together with a corresponding Q&A outline for use in responding to inquiries
about the Agreement, thereafter, Symyx and Celanese may each disclose to third
parties the information contained in such press release and Q&A without the need
for
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further approval by the other. In addition, Celanese and Symyx may make public
statements regarding the progress of the Research Program and the achievement of
milestones with respect thereto, following consultation and mutual agreement,
the consent of neither party not to be unreasonably withheld.
9.4 Publication.
(a) Review; Patentable Inventions and Confidential Information.
Any manuscript by Symyx or Celanese (the "Publishing Party") describing the
scientific results of the Research Program or the manufacturing processes or
conditions related thereto, which are to be published during the term of the
Research Program or within one (1) year after the end of the Research Program
shall be subject to the prior review of the other party (the "Non-Publishing
Party") at least ninety (90) days prior to submission. Further, to avoid loss of
patent rights as a result of premature public disclosure of patentable
information, the Non-Publishing Party shall notify the Publishing Party in
writing within thirty (30) days after receipt of any disclosure whether the
Non-Publishing Party desires to file a patent application on any invention
disclosed in such scientific results. In the event that the Non-Publishing Party
desires to file such a patent application, the Publishing Party shall withhold
publication or disclosure of such scientific results until the earlier of (i) a
patent application is filed thereon, or (ii) the parties determine after
consultation that no patentable invention exists, or (iii) ninety (90) days
after receipt by the publishing party of the Non-Publishing Party's written
notice of the Non-Publishing Party's desire to file such patent application, or
such other period as is reasonable for seeking patent protection. Further, if
such scientific results contain the information of the Non-Publishing Party that
is subject to use and nondisclosure restrictions under this Article 9, the
Publishing Party agrees to remove such information from the proposed publication
or disclosure.
(b) Publication Decision. If the Non-Publishing Party desires to
prevent publication of some or all of the scientific results or the
manufacturing processes or conditions related thereto, which are contained in a
proposed manuscript submitted for review by the Publishing Party pursuant to
Section 9.4(a), the Non-Publishing Party may so notify the Publishing Party (and
representatives of both parties on the Executive Committee) in writing within
fifteen (15) days of receiving the proposed disclosure from the Publishing
Party. If, within forty-five (45) days after the Non-Publishing Party received
the proposed disclosure, the Executive Committee reaches a unanimous decision
regarding publication of such disclosure, then the decision of the Executive
Committee shall control; provided, however, that if the Executive Committee does
not reach unanimous agreement regarding the proposed disclosure within such
forty-five (45) day period, then one party (the "Deciding Party") shall have the
right to decide whether the Publishing Party will have the right to publish the
proposed disclosure (the "Decision") as follows:
(i) the Deciding Party shall promptly, and in any event
within five (5) days after the end of the forty-five (45) day period described
above, give written notice to the other
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party stating its Decision on whether the Publishing Party may publish some or
all (or none) of the scientific results in the proposed disclosure;
(ii) if the Deciding Party does not provide written
notice of its Decision within such five-day period, then the Decision shall be
deemed to be in favor of the other party's most recent proposal;
(iii) if the Deciding Party makes the Decision in its
own favor, then the other party shall have the right to be the Deciding Party
with respect to the next proposed publication upon which the Executive Committee
does not reach agreement;
(iv) if the Deciding Party is the Publishing Party, and
the Deciding Party decides to permit publication of material opposed by the
other party in its most recent proposal, then the Deciding Party shall be deemed
to have made the Decision in its own favor;
(v) if the Deciding Party is the Non-Publishing Party,
and the Deciding Party decides not to permit the publication of some material
the other party proposed to publish in its most recent proposal, then the
Deciding Party shall be deemed to have made the Decision in its own favor;
(vi) Celanese shall be the first Deciding Party; and
(vii) if the Deciding Party is the Publishing Party, the
Decision by the Deciding Party alone shall not operate as a waiver of the
Non-Publishing Party's rights regarding patentable inventions and confidential
information set forth in Section 9.4(a).
It is understood that regardless of the permitted scope of disclosure agreed
upon by the Executive Committee or decided by the Deciding Party, the Publishing
Party shall have no obligation to publish or make the proposed disclosure.
ARTICLE 10
COMBINATORIAL CHEMISTRY TECHNOLOGY
In addition to the other terms and conditions herein, the following
terms and conditions shall apply with respect to Combinatorial Chemistry ("CC")
Technology.
10.1 Celanese Independent CC Technology Projects. During the period that
Celanese is funding the Research Program under this Agreement, Celanese shall
not conduct its own research relating to CC Technology directed to the Active
Fields or the Fields listed on Exhibits D or E hereto. Notwithstanding the
above, during the term of the Research Program Celanese may conduct independent
internal research in CC Technology with up to three (3) internal
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professional scientists and up to two (2) technicians, and may collaborate with
third parties during such period. At no time shall Celanese disclose or transfer
to any Celanese employee involved in an independent internal CC Technology
program or to any third party (including without limitation any Affiliate), any
information relating to CC Technology developed in whole or in part by Symyx or
developed in connection with the Research Program, and Celanese shall take all
necessary and appropriate steps to ensure no such disclosure or transfer occurs.
10.2 Independent CC Technology. No right, ownership interest or license
is granted under this Agreement as to any proprietary CC Technology of either
party existing as of the Effective Date or developed independently of the other
party during the term of this Agreement. Intellectual property shall be deemed
to be independently developed if is conceived, reduced to practice or otherwise
developed solely by individuals without knowledge of the proprietary information
of the other party, provided reasonably the party asserting independent
development shall have the burden of establishing such independent development.
10.3 Research Program CC Technology. Patented inventions, to the extent
they relate to CC Technology conceived or reduced to practice in connection with
the Research Program and during the term thereof and for one (1) year thereafter
(e.g., applies to inventions made by any Celanese employee with access to Symyx
proprietary information), shall be subject to the following:
10.3.1 Celanese Patents.
(a) [******]
(b) [******]
10.3.2 Joint Patents.
(a) [******]
(b) [******]
10.3.3 Symyx Patents. Symyx shall retain all rights to Symyx
patents solely owned by it which claim one or more inventions relating to CC
Technology.
10.3.4 Ownership. The ownership of patents relating to CC
Technology which may have been jointly made shall be jointly determined by the
parties in accordance with U.S. patent law, any dispute as to ownership shall be
settled by arbitration.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
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11.1 Celanese. Celanese represents and warrants on its own behalf and on
behalf of its Affiliates that: (i) it has the authority and right to enter into
this Agreement and to perform all of Celanese's obligations hereunder; and (ii)
this Agreement is a legal and valid obligation binding upon it and enforceable
in accordance with its terms.
11.2 Symyx. Symyx represents and warrants that: (i) it has the authority
and right to extend the rights granted in this Agreement, (ii) this Agreement is
a legal and valid obligation binding upon it and enforceable in accordance with
its terms; (iii) it has the full right to enter into this Agreement, and to
fully perform its obligations hereunder; (iv) it has not previously granted, and
during the term of this Agreement will not knowingly make any commitment or
grant any rights which are inconsistent in any material way with, the rights and
licenses granted herein; and (v) to the best of its knowledge as of the
Effective Date, there are no existing or threatened actions, suits or claims
pending against it with respect to the Symyx Technology; provided in each case,
however, that the representations and warranties set forth in (i) through (v)
above shall not apply with respect to the CA1 between Symyx and AR&T including,
without limitation, with respect to obligations undertaken, and rights and
licenses granted, thereunder.
11.3 Disclaimer. Celanese and Symyx specifically disclaim any guarantee
that the Research Program will be successful, in whole or in part. The failure
of the parties to successfully develop Agreement Compounds or Products will not
constitute a breach of any representation or warranty or other obligation under
this Agreement. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, SYMYX
AND CELANESE AND THEIR RESPECTIVE AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND
NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT
TO THE PROGRAM TECHNOLOGY, SYMYX TECHNOLOGY, CELANESE TECHNOLOGY, LIBRARIES,
AGREEMENT COMPOUNDS, INFORMATION DISCLOSED HEREUNDER OR AGREEMENT PRODUCTS
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF ANY PROGRAM TECHNOLOGY, SYMYX TECHNOLOGY OR
CELANESE TECHNOLOGY, PATENTED OR UNPATENTED, OR NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
ARTICLE 12
INDEMNIFICATION
12.1 Celanese. Celanese agrees to indemnify, defend and hold Symyx and
its Affiliates and their directors, officers, employees, agents and their
respective successors, heirs and assigns (the "Symyx Indemnitees") harmless from
and against any losses, costs, claims, damages, liabilities or expense
(including reasonable attorneys' and professional fees and other expenses of
litigation) (collectively, "Liabilities") arising, directly or indirectly out of
or in connection with third party claims, suits, actions, demands or judgments,
including without
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limitation, personal injury, product liability, patent infringement and trade
secret misappropriation matters, suits, actions or demands relating to (i) any
Agreement Compounds or Products developed, manufactured, used, sold or otherwise
distributed by or on behalf of Celanese, its Affiliates, Sublicensees or other
designees (including, without limitation, product liability and patent
infringement claims), (ii) Celanese's performance of the Research Program, (iii)
any inconsistency or dispute regarding the allocation of rights and licenses
under this Agreement and/or the CA1 between Celanese and AR&T (or the successors
or assigns of either of them), and (iv) any breach by Celanese of the
representations and warranties made in this Agreement, except, in each case, to
the extent such Liabilities result from a material breach of this Agreement by
Symyx, or the gross negligence or intentional misconduct of Symyx.
12.2 Symyx. Symyx agrees to indemnify, defend and hold Celanese, its
Affiliates and Sublicensees and their respective directors, officers, employees,
agents and their respective heirs and assigns (the "Celanese Indemnitees")
harmless from and against any losses, costs, claims, damages, liabilities or
expense (including reasonable attorneys' and professional fees and other
expenses of litigation) (collectively, "Liabilities") arising, directly or
indirectly out of or in connection with third party claims, suits, actions,
demands or judgments, including without limitation personal injury and product
liability matters, suits, actions, demands relating to (i) any Product
developed, manufactured, used, sold or otherwise distributed by or on behalf of
Symyx, its Affiliates, licensees (other than by Celanese or its Affiliates,
Sublicensees or other designees) or other designees (including, without
limitation, product liability and patent infringement claims), and (ii) any
breach by Symyx of its representations and warranties made in this Agreement,
except, in each case, to the extent such Liabilities result from a material
breach of this Agreement by Celanese, or the gross negligence or intentional
misconduct of Celanese.
12.3 Procedure. In the event that any Indemnitee (either a Celanese
Indemnitee or a Symyx Indemnitee) intends to claim indemnification under this
Article 12 it shall promptly notify the other party in writing of such alleged
Liability. The indemnifying party shall have the right to control the defense
thereof with counsel of its choice as long as such counsel is reasonably
acceptable to Indemnitee; provided, however, that any Indemnitee shall have the
right to retain its own counsel at its own expense, for any reason, including if
representation of any Indemnitee by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other party reasonably represented by such
counsel in such proceeding. The affected Indemnitee shall cooperate with the
indemnifying party and its legal representatives in the investigation of any
action, claim or liability covered by this Article 12. The Indemnitee shall not,
except at its own cost, voluntarily make any payment to incur any expense with
respect to any claim or suit without the prior written consent of the
indemnifying party, which such party shall not be required to give.
ARTICLE 13
TERM AND TERMINATION
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13.1 Term.
13.1.1 Research Program. The Research Program commenced under
the terms of the CA1 on or about February 1, 1997, and, unless earlier
terminated pursuant to the terms of this Article 13, shall continue until
[******] and for any extension of the Research Program pursuant to this Section
13.1.1. Celanese shall have the right to extend the Research Program (at the
funding and FTE levels set forth in the Agreement) [******]
13.1.2 Agreement. The term of this Agreement shall commence on
the Effective Date, and shall continue in full force and effect until Celanese
and its Affiliates and Sublicensees have no remaining royalty payment
obligations, unless terminated earlier as provided in this Article 13.
13.2 Termination for Breach. Either party to this Agreement may
terminate this Agreement as to any other party hereto in the event such other
party shall have materially breached or defaulted in the performance of any of
its material obligations hereunder, and such default shall have continued for
sixty (60) days after written notice thereof was provided to the breaching party
by the non-breaching party. Any termination shall become effective at the end of
such sixty (60) day period unless the breaching party (or any other party on its
behalf) has cured any such breach or default prior to the expiration of the
sixty (60) day period; provided, however, in the case of a failure to pay any
amount due hereunder, such default may be the basis of termination fifteen (15)
business days following the date that notice of such default was provided to the
breaching party. A good faith dispute as to the amount of or liability for
royalties or other amounts claimed due by the other party (excluding the
payments set forth in Section 5.1) shall not constitute a breach giving rise to
the right of termination set forth in this Section 13.2 if: (i) any
non-contested amount is paid promptly when due, (ii) all contested amounts are
placed in escrow during the pendancy of the dispute, and (iii) full payment, if
any is due, plus reasonable expenses and legal fees expended for the purpose of
collecting such amounts, is made promptly upon resolution of the dispute. If
arbitration is required to resolve the dispute over whether the contested
amounts are due, the arbitrator shall also make a determination of whether the
disputed payments were withheld in good faith and whether the withholding of
payment was frivolous. If the arbitrator determines that the withholding of
payment was not in good faith or frivolous, or both, the party claiming the
payment shall have the right to terminate this Agreement for breach effective
immediately upon written notice to the other party.
13.3 Termination for Insolvency. If voluntary or involuntary proceedings
by or against a party are instituted in bankruptcy under any insolvency law, or
a receiver or custodian is appointed for such party, or proceedings are
instituted by or against such party for corporate reorganization, dissolution,
liquidation or winding-up of such party, which proceedings, if involuntary,
shall not have been dismissed within sixty (60) days after the date of filing,
or if such party makes an assignment for the benefit of creditors, or
substantially all of the assets of such party are seized or attached and not
released within sixty (60) days thereafter, the other party may immediately
terminate this Agreement effective upon notice of such termination.
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13.4 Effect of Breach or Termination.
13.4.1 Accrued Rights and Obligations. Termination of this
Agreement for any reason shall not release either party hereto from any
liability or obligation which, at the time of such termination, has already
accrued to the other party or which is attributable to a period prior to such
termination nor preclude either party from pursuing any rights and remedies it
may have hereunder or at law or in equity with respect to any breach of these
Agreement.
13.4.2 Return of Materials. Upon any termination of this
Agreement, Celanese and Symyx shall promptly return to the other all
Confidential Information including, without limitation, all Know-How received
from the other party (except one copy of which may be retained for archival
purposes and ensuring compliance with the provisions of Article 9).
13.4.3 Post-Termination Product Sales In the event of the
cancellation or termination of any license rights with respect to a Product
prior to the expiration of this Agreement, inventory of the Product may be sold
for up to six (6) months after date of termination, provided royalties are paid
thereon.
13.4.4 Licenses.
(a) The licenses and rights granted Celanese herein
shall terminate in the event of a termination by Symyx pursuant to Section 13.2
or 13.3, and the licenses granted to Symyx in Sections 4.5 and 10.3 shall
terminate in the event of a termination by Celanese pursuant to Sections 13.2 or
13.3.
(b) If Celanese's rights terminate with respect to a
particular Agreement compound and/or Product pursuant to the terms of Section
7.2.2, for failure to meet the diligence requirements of Section 7.1, and more
than one Product is being commercially developed or exploited by Celanese or its
Sublicensees hereunder, then Symyx shall be entitled to terminate this Agreement
only with respect to the applicable Agreement Compounds and Products.
13.5 Survival. Except as set forth above, Sections 2.2.3(b), 2.5, 2.6,
2.7, 4.5, 4.6, 4.9, 5.2, 13.4 and 13.5 of this Agreement, and Articles 6, 8, 9,
10, 11 and 14 shall survive the expiration or termination of this Agreement for
any reason.
ARTICLE 14
MISCELLANEOUS
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14.1 Governing Laws. This Agreement and any dispute arising from the
construction, performance or breach hereof shall be governed by and construed
and enforced in accordance with, the laws of the state of California, without
reference to conflicts of laws principles.
14.2 No Implied Licenses. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be created by implication, estoppel or otherwise.
14.3 Waiver. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
14.4 Assignment. This Agreement shall not be assignable by either party
to any third party hereto without the written consent of the other party hereto,
except either party may assign this Agreement, without such consent, to an
entity that acquires all or substantially all of the business or assets of such
party to which this Agreement pertains, whether by merger, reorganization,
acquisition, sale, or otherwise. This Agreement shall be binding upon and accrue
to the benefit any permitted assignee, and any such assignee shall agree to
perform the obligation of the assignor.
14.5 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint ventures of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
14.6 Compliance with Laws. In exercising their rights under this
Agreement, the parties shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of rights under this
Agreement including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import and export and sale of Products
pursuant to this Agreement.
14.7 Patent Marking. Celanese agrees to mark and have its Sublicensees
mark all Agreement compounds sold pursuant to this Agreement in accordance with
the applicable statute or regulations relating to patent marking in the country
or countries of manufacture and sale thereof.
14.8 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other parties hereto and shall be deemed to have been given upon
receipt.
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Symyx: Symyx Technologies, Inc.
420 Oakmead Parkway
Sunnyvale, California 94086
Attn: President
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Michael S. Rabson
Celanese: Celanese Ltd.
1601 West LBJ Freeway
Dallas, Texas 75234
Attn: Chief Technology Officer
with a copy to: Celanese Ltd.
Corpus Christi Technical Center
1901 Clarkwood
Corpus Christi, Texas 78409
Attn: Patent Counsel
14.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect to
the fullest extent permitted by law without said provision, and the parties
shall amend the Agreement to the extent feasible to lawfully include the
substance of the excluded term to as fully as possible realize the intent of the
parties and their commercial bargain.
14.10 Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses (except for payment obligations)
on account of failure of performance by the defaulting party if the failure is
occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
embargo, governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the reasonable control and
not caused by the negligence, intentional conduct or misconduct of the
non-performing party and such party has exerted all reasonable efforts to avoid
or remedy such force majeure; provided, however, that in no event shall a party
be required to settle any labor dispute or disturbance.
14.11 Complete Agreement. This Agreement with its Exhibits, constitutes
the entire agreement, both written and oral, between the parties with respect to
the subject matter hereof, and all prior agreements respecting the subject
matter hereof, either written or oral, express or implied, shall be abrogated,
canceled, and are null and void and of no effect. No amendment or
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change hereof or addition hereto shall be effective or binding on either of the
parties hereto unless reduced to writing and executed by the respective duly
authorized representatives of Symyx and Celanese.
14.12 Dispute Resolution. Any dispute under this Agreement which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by three (3) neutral arbitrators appointed in accordance
with said rules, unless the parties agree to conduct such arbitration with a
single arbitrator. The arbitration shall be held in San Francisco, California,
and the arbitrators shall be independent experts with a background suitable for
the matters in dispute. The arbitrators shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrators shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original and a true copy
thereof. The costs of arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties. Each party shall bear its own
costs and attorneys' and witness fees. A disputed performance or suspended
performances pending the resolution of the arbitration must be completed within
thirty (30) days following the final decision of the arbitrators or such other
reasonable period as the arbitrators determine in a written opinion. Any
arbitration subject to this Section 14.12 shall be completed within one (1) year
from the filing of notice of a request for such arbitration. The award shall be
final and binding upon the parties hereto.
14.13 Export Control Regulations. The rights and obligations of the
parties under this Agreement, shall be subject in all respects to United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad, including the United States Foreign Assets
Control Regulations, Transaction Control Regulations and Export Control
Regulations, as amended, and any successor legislation issued by the Department
of Commerce, International Trade Administration, or Office of Export Licensing.
Without in any way limiting the provisions of this Agreement, Celanese agrees
that, unless prior authorization is obtained from the Office of Export
Licensing, it shall not export, re-export, or transship, directly or indirectly,
to any country, any of the technical data disclosed to Celanese by Symyx if such
export would violate the laws of the United States or the regulations of any
department or agency of the United States Government.
14.14 Headings. The captions to the several Sections hereof are not part
of this Agreement, but are included merely for convenience of reference and
shall not affect its meaning or interpretation.
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14.15 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
14.16 Affiliates. Symyx understands that Celanese conducts its business
activities in cooperation with various Celanese Affiliates around the world. In
fulfilling the obligations of Celanese under this Agreement, including, but not
limited to, its obligations under Article 7, any activities to be performed by
Celanese may be performed by such Affiliates; provided, that such performance
shall not be deemed an assignment of this Agreement and Celanese shall remain
obligated to Symyx pursuant to the terms of this Agreement. Further, to the
extent that work performed pursuant to this Agreement by a Celanese Affiliate
results in the creation of intellectual property to which Symyx would have
certain rights had such intellectual property been created by Celanese, Celanese
shall insure that Symyx rights are not restricted as a result of such work
having been performed by such an Affiliate. In addition, any rights or licenses
granted to Celanese by Symyx pursuant to this Agreement, including, but not
limited to, the licenses granted in Article 4, may be freely and unrestrictedly
sublicensed by Celanese to Celanese Affiliates subject to the terms of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
CELANESE LTD. SYMYX TECHNOLOGIES, INC.
DALLAS, TEXAS SUNNYVALE, CALIFORNIA
By: /s/ CHUCK HILTON By: /s/ ISY GOLDWASSER
-------------------------------- ------------------------------
Title: VP Title: President and CEO
-------------------------------- ------------------------------
Date: 7-28-98 Date: 8-31-98
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CELANESE LTD. CELANESE LTD.
DALLAS, TEXAS DALLAS, TEXAS
By: /s/ HENRY E. KIEFFER By: /s/ RICK SHAW
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Title: CTO Title: VP
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Date: 7-21-98 Date: 7-28-98
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Exhibit A: Definitions
Exhibit B: Procedure for Lead Compound Identification (2.4.1)
Exhibit C: Procedures regarding Inactive Projects (2.4.2)
Exhibit D: Inactive Fields (2.3.1)
Exhibit E: Preferred Fields (2.3.2)
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EXHIBIT A
DEFINITIONS
1.1 "Affiliate" shall mean any corporation or other business entity
which during the term of this Agreement controls, is controlled by or is under
common control with Symyx or Celanese or its parent entities, but only for so
long as such entity controls, is controlled by, or is under common control with
Symyx or Celanese. For this purpose, control means the possession of the power
to direct or cause the direction of the management and the policies of an entity
whether through ownership directly or indirectly of fifty percent (50%) or more
of the stock entitled to vote, and for nonstock organizations, the right to
receive over fifty percent (50%) of the profits by contract or otherwise, or if
not meeting the preceding requirement, any company owned or controlled by or
owning or controlling Symyx or Celanese at the maximum control or ownership
right permitted in the country where such company exists.
1.2 "Agreement Compound" shall mean any Lead Compound [******]
1.3 [******]
1.4 "Commodity Chemical" shall mean [******]
1.4 "Confidential Information" shall mean (i) any proprietary or
confidential information or material in tangible form disclosed hereunder that
is marked as "Confidential" at the time it is delivered to the receiving party,
or (ii) proprietary or confidential information disclosed orally hereunder which
is identified as confidential or proprietary when disclosed and such disclosure
of confidential information is confirmed in writing within thirty (30) days by
the disclosing party.
1.5 "Celanese Technology" shall mean any patent application or patent
owned or controlled by Celanese during the term of this Agreement which relates
to an invention conceived and reduced to practice outside the Research Program
by Celanese or its Sublicensees, and which claims (i) an Agreement Compound or a
Product, or (ii) a method or process for the synthesis of an Agreement Compound
or a Product, or (iii) a composition-of-matter containing an Agreement Compound
or a Product, or (iv) a method or process of use of an Agreement Compound in or
for the manufacture of a Product.
1.6 "Derivative Compound" shall mean [******]
(a) [******]
(b) [******]
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1.7 "Field" shall mean a defined area of research within the Research
Program focused on the development of Agreement Compounds for the production of
one or more Products which meet an agreed Product Group Definition. Fields
include Active Fields and Inactive Fields.
1.7.1 "Active Field" means a Field for which there is at least
one on-going Active Project.
1.7.2 "Inactive Field" means a Field listed on Exhibit D or
Exhibit E hereto for which there is no on-going Active Project.
1.8 "Field Minimum Funding" shall mean the minimum level of annual
funding support from Celanese for a particular Active Field, as provided in
Section 5.1.1 or as may otherwise be established by the EC.
1.9 "Field Minimum Term" shall mean with respect to any Active Field,
the minimum time required to conduct a comprehensive evaluation of the utility
of combinatorial technologies within such Active Field, as established by the
EC.
1.10 "Lead Compound" shall mean a Library Compound which meets the
specific [******] properties established by the RFC in the applicable Project
Plan for identifying a Lead Compound. The procedure for identifying a Lead
Compound is set forth on Exhibit B hereto.
1.11 "Library Compound" shall mean any compound or mixture or
composition of matter which is or was contained in a library prepared by or on
behalf of Symyx.
1.12 "Manufacturing Costs" shall mean (i) all direct and indirect costs
related to the manufacture by Celanese or its Affiliates of Products, including
costs for personnel, materials, quality control, regulatory compliance,
administrative expenses, subcontractors, fixed and variable manufacturing
overhead costs and business unit or division costs reasonably allocable to the
manufacture of Products, as determined and allocated in accordance with
generally accepted accounting principles, consistently applied, excluding costs
for excess manufacturing capacity not reasonably related to projected demand for
Products, or (ii) with respect to Products purchased from a third party vendor,
reasonable amounts actually paid to the vendor for such Products in arm's length
transactions.
1.13 "Net Income" shall mean the pro forma after tax income (calculated
using the normal and customary tax rate used by Celanese in its internal
calculations) attributable to royalties, license and other fees, and Net Sales
with respect to a Product, less: (a) Manufacturing Costs for such Product; and
(b) reasonable expenses incurred by Celanese in connection with the marketing,
shipping or sale of the Product, and general and administrative expenses
relating thereto, all as determined and allocated in accordance with generally
accepted accounting principles, consistently applied.
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1.14 "Net Sales" shall mean the invoice price of any Product sold by
Celanese or its Affiliates to bona fide independent third parties, less, to the
extent included in such invoice price the total of: (1) ordinary and customary
trade discounts actually allowed; (2) credits, rebates and returns; (3) freight
and duties paid for and separately identified on the invoice or other
documentation maintained in the ordinary course of business, and (4) excise
taxes, other consumption taxes, customs duties and other compulsory payments to
governmental authorities actually paid and separately identified on the invoice
or of the documentation maintained in the ordinary course of business. Net Sales
shall also include the amount of fair market value of all other consideration
received by Celanese or its Affiliates in respect of Products, whether such
consideration is in cash, payment in kind, exchange or another form.
1.12 "Product" shall mean any product which (i) incorporates an
Agreement Compound, or (ii) utilizes an Agreement Compound in its manufacture,
or (iii) is made utilizing a patentable method or patentable process within the
Program Technology as to which Symyx has an interest. By way of illustration,
without limitation, examples of Products within the Celanese Group could include
acrylic acid made by the selective oxidation of propane, or acetic acid made by
the selective oxidation of ethane and/or ethylene.
1.13 "Product Group Definition" shall mean the definition established at
the commencement of research in an Active Field which defines the Product(s)
which are the focus of a particular Active Field. [******]
1.13.1 [******]
1.14 "Program Minimum Funding" shall mean the minimum level of annual
funding support from Celanese for maintaining Program exclusivity, as provided
in Section 5.1.1(d) or as may otherwise be established by the EC.
1.15 "Program Technology" shall mean any Patent Right and Know-How
conceived, reduced to practice, or otherwise developed by Symyx or Celanese, or
jointly by the parties in connection with the conduct of the Research Program.
[PROGRAM TECHNOLOGY SHALL ALSO INCLUDE PATENT RIGHTS AND KNOW-HOW CONCEIVED,
REDUCED TO PRACTICE, OR OTHERWISE DEVELOPED BY SYMYX OR AR&T, OR JOINTLY BY
SYMYX AND AR&T, IN CONDUCTING OF THE AR&T RESEARCH PROGRAM PRIOR TO THE
EFFECTIVE DATE OF THIS AGREEMENT.] Program Technology shall not include any
Symyx Technology, Celanese Technology or CC Technology.
1.15.1 "Know-How" shall mean all data, instructions, processes,
formulas and information, including, without limitation, chemical, physical and
analytical, safety, manufacturing and quality control data and information which
is necessary for the development, manufacture or use of Agreement Compounds or
Products. Know-How does not include any inventions included in the Patent
Rights.
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1.15.2 "Patent Rights" shall mean (i) any patent or patent
application which claims an Agreement Compound or a Product, or method or
process for the synthesis of an Agreement Compound or Product, or a
composition-of-matter containing an Agreement Compound or product, or a method
or process for the use of an Agreement Compound in or for the manufacture of a
Product, and (ii) any divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions or other governmental actions which extend any of the
subject matter of the patent applications or patents in (i) above, and any
substitutions, confirmations, registrations or revalidations of any of the
foregoing.
1.16 "Project" shall mean a research effort within a Field focused on
the discovery of Lead Compounds for the manufacture of Product(s) within a
specific Product Group Definition. Projects are categorized as follows:
1.16.1 "Active Project" means a Project for which Celanese is
paying Research Expenses pursuant to Section 5.1.
1.16.2 "Inactive Project" means a Project for which Celanese is
not paying any Research Expenses.
1.17 "Research Expense" shall have the meaning set forth in Section
5.1.1(d).
1.18 Research Program.
1.18.1 "Research Program" shall mean the research activities
conducted by Symyx under this Agreement for Celanese, or by Symyx and Celanese
on a collaborative basis under this Agreement, with the goal of discovering
Agreement Compounds. It is understood that the Research Program and Active
Projects shall include activities undertaken by Celanese with respect to initial
evaluation of a given compound, including without limitation activities subject
to Section 7.1.1, but shall not include any activities conducted by Celanese in
manufacturing scale-up or commercial manufacturing, or in evaluating or
developing a given Lead Compound after Celanese has sent the Validation Notice
described in Section 7.1.1 for such Lead Compound. [THE RESEARCH PROGRAM SHALL
ALSO INCLUDE THE AR&T RESEARCH PROGRAM.]
1.18.2 ["AR&T RESEARCH PROGRAM" SHALL MEAN RESEARCH ACTIVITIES
CONDUCTED PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT BY SYMYX FOR AR&T OR BY
SYMYX AND AR&T ON A COLLABORATIVE BASIS UNDER CA1 WITH RESPECT TO THE FIELD OF
THIS AGREEMENT.]
1.19 "Specialty Chemical" shall mean chemicals and materials which are
not Commodity Chemicals.
1.19 "Sublicensee" shall mean, with respect to a particular Product, a
third party to whom Celanese has granted a license or sublicense to develop,
make, import, use, offer for sale or sell such Product. As used in this
Agreement, Sublicensee shall also include a third party to
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whom Celanese has granted the right to distribute such Product, provided that
such third party has the primary responsibility for marketing and promotion at
its expense of such Product within the field or territory for which such
distribution rights are granted.
1.20 "Symyx Technology" shall mean all patents, copyrights, trade
secrets, knowhow, data, and other intellectual property of any kind owned or
controlled by Symyx during the term of this Agreement which relates to an
invention conceived and reduced to practice outside the Research Program by
Symyx, and which claims an Agreement Compound or a Product, or a method or
process for the synthesis an Agreement Compound or a Product, or a
composition-of-matter containing an Agreement Compound or a Product, or a method
or process of use of an Agreement Compound in or for the manufacture of a
Product.
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EXHIBIT B
PROCEDURE FOR
LEAD COMPOUND IDENTIFICATION
1. At such time as Symyx has identified a Library Compound which it
believes may meet the Lead Criteria for a particular Active Project it shall
provide the data and results supporting such conclusion to the applicable RFC.
2. Following the identification of any potential Lead Compound, at
Celanese's request, Symyx shall prepare and deliver to Celanese gram quantities
of such potential Lead Compound, which Celanese shall use in confirming whether
such potential Lead Compound meets the applicable lead criteria. Symyx will use
commercially reasonable efforts to provide quantities in such amounts as the RFC
may determine is reasonably required by Celanese for testing, and will notify
Celanese if it is not commercially reasonable to provide such quantities to
Celanese, in which case the parties agree to meet and discuss how to proceed
with respect to such Lead Compound.
3. The RFC for a particular Active Field shall review the results
provided by Celanese with respect to a potential Lead Compound, and if such
results indicate that the applicable lead criteria have been satisfied, the RFC
shall deem such Library Compound to be a potential Lead Compound for all
purposes of this Agreement.
4. In the event that the RFC requests further information or the conduct
of further studies to confirm whether a potential Lead Compound meets the
applicable lead criteria, Symyx and Celanese shall prepare any such information
and conduct any such studies.
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EXHIBIT C
PROCEDURES REGARDING ACTIVATION OF
INACTIVE PROJECTS
1. Inactive Projects. The RFC for each Active Field shall at the request
of either party consider any proposed Inactive Projects which a party believes
would be fruitful to pursue in connection with the Active Field, and at least
quarterly prepare an updated prioritized list of such Inactive Projects.
2. Activation of Inactive Projects. At any time while Celanese is paying
Research Expenses for a particular Active Field equal to or greater than the
Field Minimum Funding for such Active Field, the RFC for a particular Active
Field may agree to recommend to the EC that an Inactive Project within such
Active Field be activated to become an Active Project. In such event, the
parties shall exchange technical information relevant to the proposed Inactive
Project including the feasibility of such Inactive Project and the likelihood of
identifying a Lead Compound in connection therewith. Within ninety (90) days of
the initial notice, the EC shall determine whether to activate such Inactive
Project. If approved by the EC, the RFC shall (i) prepare a Project plan, (ii)
establish the Product Group Definition for such Active Project, and (iii)
establish the physical, chemical and/or catalytic criteria for identification of
a Lead Compound. Activation of an Inactive Project shall become effective upon
completion of all of the foregoing.
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EXHIBIT D
INACTIVE FIELDS
EXCLUSIVE LIST
[******]
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EXHIBIT E
INACTIVE FIELDS
RIGHT OF NEGOTIATION LIST
[******]
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the omitted portions.
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EXHIBIT 10.10
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
The Dow Chemical Company - Symyx Technologies
This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement"),
effective as of January 1, 1999 (the "Effective Date"), is made by and between
Symyx Technologies, a California corporation having a principal place of
business at 3100 Central Expressway, Santa Clara, California 95051 ("Symyx"),
and The Dow Chemical Company, a Delaware corporation, having a principal place
of business at 2030 Willard H. Dow Center, Midland, Michigan 48674 ("TDCC").
BACKGROUND
A. Symyx owns and is developing novel, proprietary methods for the
combinatorial preparation and screening of novel materials and has
conducted certain materials discovery research focused on the discovery
and enhancement of [******] and other materials; and
B. TDCC owns and is developing proprietary process technology related to
manufacture of [******] ; and
C. Symyx and TDCC desire to collaborate to research, develop and
commercialize certain [******] on the terms and conditions set forth
below.
NOW, THEREFORE, for and in consideration of the covenants, conditions
and undertakings set forth herein, it is agreed by and between the parties as
follows:
ARTICLE 1
DEFINITIONS
1.1 "Added Value" shall have the meaning set forth in Section 5.2.1(i).
1.2 "Affiliate" shall mean any entity directly or indirectly
controlling, controlled by or under common control with, a party to this
Agreement. For purposes of this Agreement, the direct or indirect ownership of
fifty percent (50%) or more of the outstanding voting securities of an entity,
or the right to receive fifty percent (50%) or more of the profits or earnings
of an entity shall be deemed to constitute control. In addition, any entity
directly or indirectly owned or controlled by, or owning or controlling, TDCC or
Symyx at the maximum control or ownership right legally permitted in a country
where such entity exists, shall be deemed to constitute control provided that it
in fact results in actual control over the management, business and affairs of
such entity.
1.3 "Agreement Compound" shall mean any Lead Compound [******] .
1.4 "Combinatorial Chemistry Technology" shall mean Combinatorial
Chemistry Patent Rights and Combinatorial Chemistry Know-How.
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1.4.1 "Combinatorial Chemistry Patent Rights" shall mean (i) all
U.S. patent applications claiming any inventions or discoveries related to
Combinatorial Chemistry, (ii) all divisions, substitutions, continuations,
continuation-in-part applications, and reissues, re-examinations and extensions
of (i) above, (iii) foreign counterparts of any of the preceding of (i) or (ii)
above, and (iv) patents, utility models or similar grants of rights issuing from
any of the preceding of (i), (ii) or (iii) above .
1.4.2 "Combinatorial Chemistry Know-How" shall mean inventions,
information, data, or materials related to Combinatorial Chemistry, excluding
any inventions claimed in the Combinatorial Chemistry Patent Rights.
1.4.3 [******]
1.5 "Confidential Information" shall mean any information disclosed by
one party (or by an Affiliate of a party on behalf of that party) to the other
party or its representatives in connection with this Agreement which is in
written, graphic, machine readable or other tangible form and is marked
"Confidential" or "Proprietary" or in some other manner to indicate its
confidential nature. Confidential Information may also include information that
is disclosed orally or by observation, provided that such information is
designated as confidential at the time of disclosure and confirmed in writing as
confidential within thirty (30) days after such disclosure.
1.6 [******]
1.7 [******] .
1.8 [******] .
1.9 [******]
1.10 "Direct Modification" shall have the meaning set forth in Section
4.1.3.
1.11 "Discovery Tools" shall have the meaning set forth in Section 2.8.
1.12 "[******] " shall have the meaning set forth in Section 2.5.
1.13 "Executive Committee" shall have the meaning set forth in Section
3.6.
1.14 "Field" means the discovery, development and use of [******] to
make [******] in a defined reaction agreed upon by the parties. The Fields are
set forth in Exhibit A.
1.15 "FTE" shall mean a full-time employee or independent contractor
utilized for the conduct of the Research Program or, in the case of less than
full-time dedication, a full-time equivalent person-year, based on a total of
forty-six and 1/4 (46.25) weeks or one thousand eight hundred fifty (1,850)
hours per year, of work on or directly related to the Research Program.
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1.16 "Independent TDCC Research" shall have the meaning set forth in
Section 2.3.3.
1.17 "Joint Invention" shall have the meaning set forth in Section 7.1.
1.18 "Lead Compound" shall mean a Library Compound which meets the
specific [******] properties established either in the Research Plan or by the
Research Committee for identifying a Lead Compound. The procedure for
identifying a Lead Compound is set forth on Exhibit B hereto. It is understood
and agreed that any Library Compound that is transferred from Symyx to TDCC and
subsequently commercialized by or under authority of TDCC or its Affiliates
shall be deemed a Lead Compound.
1.19 "Library Compound" shall mean any compound or mixture or
composition of matter screened or prepared by or on behalf of Symyx in the
course of the Research Program in order to determine its usefulness [******] in
connection with a Field. However, any compound, mixture or composition of matter
provided to Symyx by TDCC (or by an Affiliate of TDCC on behalf of TDCC) for
screening as a [******] provided under another agreement shall not be deemed to
be a Library Compound.
1.20 "Manufacturing Costs" shall mean (i) all direct and indirect costs
related to the manufacture by TDCC or its Affiliates of Products, including
costs for personnel, materials, quality control, regulatory compliance,
administrative expenses, subcontractors, fixed and variable manufacturing
overhead costs and business unit or division costs reasonably allocable to the
manufacture of Products, as determined and allocated in accordance with
generally accepted accounting principles, consistently applied, excluding costs
for excess manufacturing capacity not reasonably related to projected demand for
Products, or (ii) with respect to Products purchased from a Third Party vendor,
reasonable amounts actually paid to the vendor for such Products in arm's length
transactions.
1.21 "Net Income" shall mean the pro forma amounts attributable to
royalties, license and other fees projected to be received, and projected Net
Sales with respect to a Product, less the projected: (a) Manufacturing Costs for
such Product; and (b) reasonable expenses incurred by TDCC or its Affiliates in
connection with the marketing, shipping or sale of the Product, and general and
administrative expenses relating thereto, all as determined and allocated in
accordance with generally accepted accounting principles, consistently applied.
1.22 "Net Sales" shall mean the invoice price billed by TDCC or its
Affiliates to Third Parties for the sale of Products, after deduction of (1)
cash, trade and/or quantity discounts actually allowed; (2) amounts repaid or
credited by reason of rejections or returns of goods, recalls, chargebacks,
defects, rebates (including government mandated rebates); (3) freight, postage,
and duties paid for and separately identified on the invoice or other
documentation maintained in the ordinary course of business, and (4) excises,
sales taxes, value added taxes, and duties actually paid and separately
identified on the invoice or other documentation maintained in the ordinary
course of business. Net Sales shall also include the amount of fair market value
of all other consideration received by TDCC or its Affiliates in respect of sale
of Products, whether such consideration is in
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cash, payment in kind, exchange or another form. In the case of a transfer of
Products between TDCC and one of its Affiliates or between two Affiliates of
TDCC for any purpose other than research, development or sampling, Net Sales
shall where feasible be determined as provided in Section 5.2.1(vii).
1.23 [******] .
1.24 "Outside Technology" shall have the meaning set forth in Section
2.3.3.
1.25 "Product" shall mean any product that (i) contains an Agreement
Compound, and/or (ii) contains a reaction product or other chemical derivative
of an Agreement Compound, (iii) utilizes in its manufacture any method or
process within the Program Technology developed by Symyx or developed jointly by
Symyx and TDCC, or (iv) utilizes an Agreement Compound in its manufacture,
[******] .
1.26 "Program Experiment" shall have the meaning set forth in Section
2.1.1(b).
1.27 "Program Technology" shall mean Program Patents and Program
Know-How.
1.27.1 "Program Know-How" shall mean inventions, information,
data, or materials developed by Symyx or TDCC or jointly by Symyx and TDCC in
each case in the course of the Research Program that are useful for the
manufacture, use or sale of Agreement Compounds or Products; provided, however,
that Program Know-How shall not include any Combinatorial Chemistry Technology,
Outside Technology, any invention claimed in the Program Patents or results of
Independent TDCC Research.
1.27.2 "Program Patents" shall mean (i) all U.S. patent
applications claiming any inventions or discoveries conceived and reduced to
practice in the course of the Research Program by Symyx or TDCC or jointly by
Symyx and TDCC, or conceived by Symyx before the Research Program and reduced to
practice in the Research Program, which claim an Agreement Compound or a
Product, or method or process for the manufacture of an Agreement Compound or
Product, or a composition-of-matter containing an Agreement Compound or Product,
or a method or process for the use of an Agreement Compound in or for the
manufacture of a Product, in each case that are necessary or materially useful
for the manufacture, use or sale of Agreement Compounds or Products in the
Field, (ii) all divisions, substitutions, continuations, continuation-in-part
applications, and reissues, re-examinations and extensions of (i) above, (iii)
foreign counterparts of any of the preceding of (i) or (ii) above, and (iv)
patents, utility models or similar grants of rights issuing on any of the
preceding of (i), (ii) or (iii) above. It is understood and agreed that Program
Patents shall not include any Combinatorial Chemistry Technology or results of
Independent TDCC Research.
1.28 "Research Committee" shall have the meaning set forth in Section
3.1.
1.29 "Research Plan" shall have the meaning set forth in Section 2.1.
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1.30 "Research Program" shall mean the program of research conducted by
Symyx and/or TDCC on a collaborative basis under this Agreement for the purpose
of identifying and optimizing Agreement Compounds for use [******] in the Field.
It is understood that the Research Program does not include screening of
compounds, mixtures or compositions of matter provided to Symyx by TDCC (or by
an Affiliate of TDCC on behalf of TDCC) for screening [******] , which research
is to be conducted under terms of a separate agreement.
1.31 "Research Program Term" shall have the meaning described in Section
2.2.
1.32 "Sublicensee" shall mean, with respect to a particular Product, a
Third Party to whom TDCC or its Affiliate has granted a license or sublicense to
make, use and sell such Product.
1.33 "Symyx Patents" shall mean all U.S. patent applications filed on or
before or claiming priority on or before the date five (5) years after the end
of the Research Program claiming any inventions or discoveries owned or
controlled by Symyx (or by any wholly-owned subsidiary of Symyx) which claim an
Agreement Compound or a Product, or method or process for the manufacture of an
Agreement Compound or Product, or a composition-of-matter containing an
Agreement Compound or Product, or a method or process for the use of an
Agreement Compound in or for the manufacture of a Product, in each case that are
necessary or materially useful for the manufacture, use or sale of Agreement
Compounds, or Products in the Field [******] , (ii) all divisions,
substitutions, continuations, continuation-in-part applications, and reissues,
re-examinations and extensions of (i) above, (iii) foreign counterparts of any
of the preceding of (i) or (ii) above, and (iv) patents, utility models or
similar grants of rights issuing on any of the preceding of (i), (ii) or (iii)
above. Notwithstanding the foregoing, it is understood and agreed that "Symyx
Patents" shall not include patent applications or patents claiming inventions
made by Symyx or its wholly-owned subsidiary (solely or jointly) in
collaboration with, or as part of a research program funded by, a Third Party if
such collaboration or research program is not directed to [******] .
1.34 "Third Party" shall mean any party other than Symyx and its
Affiliates, TDCC and its Affiliates, and their permitted assignees.
ARTICLE 2
RESEARCH PROGRAM
2.1 Research Program. Subject to the terms and conditions set forth
herein, Symyx and TDCC shall conduct the research activities in the Fields in a
collaborative effort in accordance with an agreed upon written plan describing
the research activities to be conducted by each party (the "Research Plan"). The
initial Research Plan has been agreed upon by the parties in writing prior to
the Effective Date.
2.1.1 Responsibility - Symyx. During the term of the Research
Program, Symyx shall use efforts that are reasonable in the circumstances and
consistent with professional standards
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applicable to research in the Field as well as relevant standards applied by
Symyx in conducting research outside the Research Program, to conduct research
activities in accordance with the Research Plan to identify, discover or
synthesize [******] in the Fields by preparing and screening Library Compounds
as set forth in the Research Plan.
(a) Compounds Already Identified. Symyx shall make available for
evaluation in the Research Program any compound, mixture or composition of
matter which was screened or prepared by or on behalf of Symyx prior to the
Effective Date or during the Research Program Term and is both (i) owned or
controlled by Symyx to the extent that no obligations to any Third Party will be
violated by use of the compound, mixture or composition in the Research Program
and (ii) believed by Symyx to be potentially useful as a Lead Compound or a
precursor of a Lead Compound.
(b) FTEs and Experiments. During each calendar year quarter of
the Research Program Term, Symyx shall, in its discretion taking into
consideration what is required to achieve the objectives of the Research Plan,
either (i) utilize [******] FTEs to conduct the Research Program or [******] .
Each FTE utilized by Symyx shall be qualified for the activities assigned to him
or her under the Research Program. The FTEs will include FTEs for Chemistry,
Engineering, Database and Software. [******] The Program Experiments conducted
by Symyx during the Research Program will be selected consistent with the
objectives set forth in the Research Plan. Duplication of Program Experiments
during the Research Program will be avoided unless required as a control or for
other valid research purposes consistent with the objectives set forth in the
Research Plan.
(c) Other Responsibilities. Symyx shall use reasonable efforts
to ensure that the most efficient and effective Combinatorial Chemistry
Technology reasonably available to Symyx are made available for conducting the
Research Program. At TDCC's request, Symyx will use commercially reasonable
efforts to provide samples of up to ten (10) grams of any Lead Compound;
however, if such sample cannot be provided at a commercially reasonable cost,
Symyx will so notify TDCC and the parties shall meet to discuss how to proceed.
Notwithstanding any other provision of this Agreement, Symyx shall not, without
its consent, be required to perform research activities other than in accordance
with the Research Plan, [******] 2.1.2 Responsibility - TDCC. During the
Research Program Term, TDCC shall (i) conduct research activities in accordance
with the Research Plan to identify, discover or synthesize [******] in the
Fields, and (ii) to provide Symyx technical information and technical support
reasonably necessary to conduct of the Research Program in accordance with the
Research Plan. TDCC's efforts in conduct of the Research Program shall be
reasonable in the circumstances and consistent with professional standards
applicable to research in the Field as well as relevant standards applied by
TDCC in conducting research outside the Research Program. Notwithstanding any
other provision of this Agreement, TDCC shall not, without its consent, be
required to disclose proprietary information to Symyx which is not essential to
conduct of the Research Program or to provide equipment or materials.
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2.1.2 Responsibility - TDCC. During the Research Program Term,
TDCC shall (i) conduct research activities in accordance with the Research Plan
to identify, discover or synthesize [******] in the Fields, and (ii) to provide
Symyx technical information and technical support reasonably necessary to
conduct of the Research Program in accordance with the Research Plan. TDCC's
efforts in conduct of the Research Program shall be reasonable in the
circumstances and consistent with professional standards applicable to research
in the Field as well as relevant standards applied by TDCC in conducting
research outside the Research Program. Notwithstanding any other provision of
this Agreement, TDCC shall not, without its consent, be required to disclose
proprietary information to Symyx which is not essential to conduct of the
Research Program or to provide equipment or materials.
2.2 Research Program Term. The Research Program Term shall commence on
the Effective Date and, unless earlier terminated, continue thereafter for a
period [******] or such other period as the parties may mutually agree in
writing.
2.3 Exclusivity and Independent Research.
2.3.1 In the Field. During the Research Program Term, Symyx
shall not conduct any research activities outside the Research Program, on its
own behalf or on behalf of any Third Party, directed to [******] within the
scope of the Field. In addition, during the Research Program Term, Symyx shall
not knowingly provide Library Compounds to a Third Party for use in [******].
2.3.2 Other [******] Research by Symyx. It is understood that
Symyx will conduct research activities outside the Research Program ("Other
[******] Research") during the Research Program Term for itself and/or Third
Parties for the purpose of [******] other than in the Field. In the event some
Symyx employees work on both the Research Program and the Other [******]
Research, Symyx shall use good faith commercially reasonable efforts to avoid
potential conflicts or overlaps between the Research Program and Other [******]
Research and misappropriation of any Confidential Information. It is understood
that the Library Compounds are regularly used by Symyx and that Symyx can use
and screen the Library Compounds for any use on its own behalf or for Third
Parties, including without limitation for Other [******] Research, except to the
extent that Symyx has granted to TDCC exclusive rights to screen and optimize
the Library Compounds in the Field as set forth in Section 2.3.1. In the event
that Symyx becomes aware of information, data, materials or inventions which
Symyx believes may advance the Research Program, in the course of conducting
research outside of the Research Program at its own expense or in collaboration
with a Third Party, Symyx will make available these information, data, materials
and inventions for use in the Research Program to the extent it is free to do so
without violating obligations to any Third Party; provided, however, it is
understood that this provision shall not impose, or be construed to impose, any
obligation on Symyx to identify or make itself aware of any such information,
data, materials and inventions.
2.3.3 Independent TDCC Research. It is understood that this
Agreement shall not prohibit TDCC from conducting research activities outside of
and independent from the Research
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Program ("Independent TDCC Research") during the Research Program Term for
itself and/or with Third Parties for the purpose of [******]. In the event some
TDCC employees work on both the Research Program and the Independent TDCC
Research, TDCC shall use good faith commercially reasonable efforts to avoid
potential conflicts or overlaps between the Research Program and Independent
TDCC Research and misappropriation of any Confidential Information of Symyx. In
the event that TDCC in the course of conducting research outside of and
independent from the Research Program discovers information, data, materials or
inventions ("Outside Technology") which TDCC believes may advance the Research
Program, TDCC may make such Outside Technology available for use in the Research
Program the extent it is free to do so without violating obligations to any
Third Party, and it is understood that such Outside Technology shall not be
deemed to be Program Technology; provided, however, that information, data,
materials or inventions made in the Research Program shall be deemed to be
Program Technology whether or not such information, data, materials or
inventions were made using Outside Technology.
2.4 Changes to Fields. The initial Fields activated in the Research Plan
shall be two or more Fields designated in the Research Plan. During the Research
Program Term, TDCC and Symyx may agree to conduct research in one or more
additional Fields, or to amend Exhibit A to create a new Field. In the event
that TDCC and Symyx agree to a new Field, this will be documented by appropriate
written modifications to the Research Plan, including criteria for identifying a
Lead Compound in such Field, and appropriate modifications in writing to the
staffing plan of the Research Program activities in connection with such Field.
TDCC and Symyx may also agree to discontinue activity in one or more Fields by
written modifications to the Research Plan. Appropriate modifications or
adjustments to staffing of the Research Program will be agreed to reflect any
changes in activity of the Fields. The Research Committee described in Section
3.1 shall in general provide direction for any changes in Fields and make formal
recommendations to the Executive Committee. Symyx shall not unreasonably refuse
to agree to changes proposed by TDCC to change activity in the Fields. TDCC
shall not unreasonably refuse to agree to adjustments in staffing of the
Research Program proposed by Symyx as a consequence of any changes in the
activity of the Fields.
2.5 [******]
2.6 Research Records. Symyx and TDCC shall maintain records of the
Research Program (or cause such records to be maintained) in sufficient detail
and in good scientific manner as will properly reflect the work done and results
achieved in the performance of the Research Program (including information
sufficient to establish dates of conception and reduction to practice of
inventions). Access to such records shall be granted as provided in Sections
5.1.3 and 7.2.
2.7 Development and Commercialization of Agreement Compounds and
Products. TDCC and its Affiliates shall be responsible for all expenses incurred
for the development and commercialization of Agreement Compounds and Products by
TDCC and its Affiliates under the terms of this Agreement.
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2.8 Discovery Tools. It is understood that Symyx has been at its own
expense developing and intends to continue to develop [******] (collectively,
the "Discovery Tools"), and that Symyx intends to offer some or all of these
Discovery Tools to TDCC and/or TDCC Affiliates and possibly to Third Parties,
either through sale of equipment and supplies and/or licenses to intellectual
property or some other means selected at Symyx's discretion. Symyx agrees to
provide TDCC a proposal (the "Tools Proposal") setting forth a summary of terms
which in Symyx's opinion are essential and on which Symyx is willing to license
and/or sell such Discovery Tools to TDCC on or before April 1, 1999, and Symyx
and TDCC agree to negotiate in good faith to enter into a written agreement for
such license and/or sale of Discovery Tools for a period of sixty (60) days
following delivery of the Tools Proposal, it being understood that such written
agreement shall set forth mutually agreed terms and conditions on which Symyx
will license and/or sell Discovery Tools on a non-exclusive basis as reasonably
required for internal research use by TDCC and/or TDCC's Affiliates. In order to
provide TDCC an opportunity to be one of Symyx's first customers to exploit the
Discovery Tools for [******] applications, Symyx will not ship or deliver the
Discovery Tools to any of the companies listed in Exhibit C earlier than one
year after the date Symyx notifies TDCC such Discovery Tools are available for
shipment to TDCC, provided that TDCC or TDCC's Affiliates enter into a written
agreement with Symyx to purchase and/or license Discovery Tools on or before
sixty (60) days after Symyx has delivered the Tools Proposal to TDCC, and such
agreement is not breached by TDCC. Symyx shall also not knowingly deliver
Discovery Tools to a Third Party which Symyx has reason to know at the time of
contracting to deliver same would be used for the benefit of any of the
companies on Exhibit C during the period, if any, that Symyx is obligated not to
license or sell Discovery Tools to such companies. It is understood and agreed
that the terms for sale of Discovery Tools by Symyx to TDCC are to be mutually
agreed in writing and this Agreement does not itself obligate Symyx to sell or
TDCC to purchase such Discovery Tools, or obligate either Symyx or TDCC to
accept or agree to terms and conditions of any such sale and/or license. In the
event that Symyx and TDCC do not conclude a written agreement regarding purchase
or license of Discovery Tools within sixty (60) days of delivery of the Tools
Proposal, TDCC and Symyx may mutually agree to terms of such an agreement at a
later date but Symyx shall be free to ship or deliver Discovery Tools to any
party.
2.9 Third Party Claims. In the event that TDCC or Symyx receives a
written notice from any Third Party alleging patent infringement,
misappropriation of trade secrets, or other violation of intellectual property
rights, based on research activities in the Research Program (i) such party
shall promptly notify the other, and (ii) Symyx shall have the right, in its
discretion, to cease to conduct any research activities that are the subject of
such claim without liability to TDCC; provided, however, that if TDCC acquires a
license to permit the conduct of such activities by Symyx in the Research
Program, and/or if TDCC and Symyx mutually agree in writing upon terms of
indemnification by TDCC for Symyx's conduct of such activities, then Symyx will
resume or continue, as appropriate, such activities in accordance with the
Research Plan and the terms and conditions of this Agreement. In the event Symyx
decides to cease to conduct any research activities pursuant to this Section
2.9, Symyx and TDCC shall endeavor to change or modify the Fields as provided in
Section 2.4 in a manner which maintains the value of the Research Program to
TDCC; provided, however, that if such cessation of research activities by Symyx
will have a material
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adverse impact on the Research Program which in the reasonable opinion of TDCC
will not be adequately remedied by a change or modification of Fields, then TDCC
shall have the right to terminate the Research Program on thirty (30) days
written notice to Symyx specifying termination pursuant to this Section 2.9 and
identifying the ceased research activities giving rise to the termination.
ARTICLE 3
MANAGEMENT
3.1 Establishment of Research Committee. Symyx and TDCC shall establish
a committee (the "Research Committee") to (i) monitor technical progress in the
Research Program and report progress to the Executive Committee, (ii) modify the
Research Plan as needed within the scope of the Fields, (iii) establish criteria
to define Lead Compounds within each Field, and (iv) recommend to the Executive
Committee changes in the Fields in accordance with Section 2.4, and (v) ensure
open communications between the parties.
3.2 Membership of Research Committee. The Research Committee shall be
comprised of three (3) representatives designated by each of Symyx and TDCC, or
such other equal number of representatives as the parties may from time to time
agree in writing, with each party's representatives selected by that party.
Either party may replace one or more of their respective Research Committee
members at any time, upon written notice to the other party. The chairperson of
the Research Committee shall be selected by TDCC. The secretary of the Research
Committee shall be selected by Symyx.
3.3 Technical Team and Program Coordinator. Symyx and TDCC shall each
designate two or more representatives to serve on a Technical Team which will:
(i) provide day to day oversight and coordination of activities under the
Research Program, and (ii) initiate and respond to communications between the
parties related to conduct of the Research Program. Each party shall designate a
single program coordinator to lead its representatives on the Technical Team and
to resolve or facilitate resolution of issues arising under the provisions of
this Agreement. The Technical Team shall report progress and refer unresolved
disputes to the Research Committee. Each party may change its designated program
coordinator or representatives on the Technical Team at any time upon written
notice to the other.
3.4 Meetings. During the Research Program Term, the Research Committee
shall meet at regular intervals at least four times per year at locations and
times agreed by the parties. Special meetings of the Research Committee may be
called by either party on ten (10) days written notice to the other party. All
meetings shall alternate between offices of TDCC and Symyx unless members of the
Research Committee otherwise agree. Upon consent of the parties, other
representatives of Symyx or TDCC may attend Research Committee meetings as
nonvoting observers. Research Committee members may participate in any such
meeting in person, by telephone, or by televideo conference. Symyx shall prepare
minutes of each Research Committee meeting, which minutes shall
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<PAGE> 11
be subject to review and approval by TDCC. The reviewed and approved minutes
shall be signed by Research Committee representatives of each party.
3.5 Decision Making. A quorum of the Research Committee shall be present
at any meeting where at least one member of each party participates in all
decisions. Decisions of the Research Committee shall be made by unanimous
approval. In the event the Research Committee is unable to decide an issue, it
may be referred by either party to the Executive Committee for resolution.
3.6 Executive Committee. Symyx and TDCC shall establish a committee
comprised of one representative each from Symyx and TDCC (the "Executive
Committee"). Each party's representative on the Executive Committee shall be
selected by that party, and either party may replace its Executive Committee
representative at any time, upon written notice to the other party. The initial
members of the Executive Committee shall be [******] for TDCC and [******] for
Symyx. The Executive Committee shall meet at least twice per year at locations
and times agreed by the parties, and members of the Executive Committee may
participate in any such meeting in person, by telephone, or by televideo
conference. Special meetings of the Executive Committee may be called by either
party on fifteen (15) days written notice to the other party. Upon consent of
the parties, other representatives of Symyx or TDCC may attend Executive
Committee meetings as nonvoting observers. Symyx shall prepare minutes of each
Executive Committee meeting, which minutes shall be subject to approval by TDCC
and after approval will be signed by Executive Committee representatives of each
party. The Executive Committee shall (i) oversee the direction of the overall
relationship between TDCC and Symyx, (ii) resolve any disputes not resolved by
the Research Committee, (iii) set the direction of the Research Program within
the bounds set forth in this Agreement and the Research Plan, and (iv) decide
upon changes in Fields. In the event that the Executive Committee cannot reach
unanimous agreement on matters related to the conduct of the Research Program
other than: (a) the interpretation of obligations of confidentiality under this
Agreement, (b) the amount of any payments due hereunder, (c) intellectual
property ownership, (d) additions to or changes in the scope of the Fields, (e)
staffing of research projects, (f) expenditures by Symyx in conducting the
Research Program, and (g) rights granted under Article 4, TDCC shall have the
right to cast the deciding vote. Unresolved disputes related to (a), (b), (c),
(d), (e), (f), or (g) shall be subject to binding arbitration by either party as
set forth in Section 13.16, in the absence of a unanimous decision by the two
members of the Executive Committee.
ARTICLE 4
LICENSES
4.1 License to TDCC.
4.1.1 License in the Fields. Subject to the terms and conditions
of this Agreement, Symyx agrees to grant, and hereby grants, to TDCC, and TDCC
hereby accepts an exclusive (even as to Symyx), worldwide, royalty-bearing
license under Symyx's interest in the Program Technology to
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make, have made, import and use Agreement Compounds to develop, make, have made,
use, sell, offer for sale, and import Products within the scope of the
corresponding Fields. [******]
4.1.2 [******]
4.1.3 [******]
4.2 Sublicenses. Subject to the terms and conditions of this Agreement,
TDCC shall have the right to grant sublicenses under the rights granted in
Section 4.1 above to Affiliates of TDCC; provided that the terms of each such
sublicense shall be consistent with the terms of this Agreement. It is
understood that any such sublicense shall be subject and subordinate to the
terms and conditions of this Agreement, and that TDCC shall remain responsible
for all applicable financial and other obligations under this Agreement for each
such Affiliate sublicensed, including without limitation milestone and royalty
payments due to Symyx hereunder with respect to development and sales of
Products. Subject to the terms and conditions of this Agreement, TDCC or an
Affiliate of TDCC shall also have the right to grant sublicenses under the
rights granted in Sections 4.1.1, 4.1.2 and 4.1.3 above to one or more Third
Parties; provided that any revenue received from such a Sublicensee for such
grant shall be shared in accordance with Section 5.2(iv). TDCC shall provide to
Symyx at least the following information with respect to each Sublicensee or
Affiliate sublicensed: (i) the identity of each Sublicensee or Affiliate
sublicensed, (ii) a summary of the rights granted as to both subject matter and
territory; and (iii) a summary of the Confidential Information of Symyx and
Program Technology furnished to each Sublicensee or Affiliate. No sublicense
granted by TDCC or an Affiliate to a Third Party may be further assigned or
further transferred by any Sublicensee without the prior written consent of
Symyx, which consent shall not be unreasonably withheld; provided, any such a
sublicense may be further assigned by a Sublicensee without the consent of Symyx
in connection with a transfer of substantially all the business of such
Sublicensee to which such sublicense relates.
4.3 Third Party Rights. It is understood that Symyx is in the business
of conducting materials discovery, research and development with Third Parties,
and that Symyx will continue to grant Third Parties rights to acquire licenses
related to compounds and materials derived from such research. It is possible
that a Third Party may acquire rights from Symyx with respect to one or more
compounds or materials that are solely owned by Symyx or jointly owned by Symyx
and a Third Party and which were made and designed independently of Symyx's
activities in the Research Program. Accordingly, Symyx's grant of rights to TDCC
under Section 4.1 does not include (i) rights that are covered by a patent
application with respect to such a compound or material that was made and
designed independently of activities in the Research Program and is solely owned
by Symyx or a Third Party or jointly owned by Symyx and a Third Party, where
such patent application was filed by a Third Party (either alone or jointly with
Symyx) prior to the filing by TDCC (either alone or jointly with Symyx) of a
patent application with respect to such a compound or material, or (ii) rights
which are subject to a license, option, or other rights that Symyx has granted
to a Third Party prior to the Effective Date. It is understood and agreed that,
even if Symyx complies with its obligations under this Agreement, research for
Third Parties in the course of Symyx's other business
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activities may result in patent applications and patents owned by Third Parties,
or owned jointly by Symyx and such Third Parties, which could conflict with
patent applications and patents owned by TDCC, or jointly owned by TDCC and
Symyx, under this Agreement. Symyx shall use its good faith commercially
reasonable efforts to avoid such conflicts. In the event that conflicts arise
between rights granted to TDCC in the Field and rights granted by Symyx outside
the Field, Symyx agrees to use commercially reasonable efforts to promote a
resolution of the conflict between TDCC and the Third Party via a cross-license
or other arrangement acceptable to the parties involved. It is understood that,
except to the extent that TDCC is damaged as a proximate result of a material
breach by Symyx of Sections 2.3, 4.1.1, or 10.2 of this Agreement, then Symyx
shall have no liability under this Agreement with respect to any such conflict.
4.4 Joint Inventions Outside of the Fields. TDCC, TDCC's Affiliates,
Symyx, and Symyx's Affiliates shall each have the right to use Joint Inventions
for internal research purposes outside of the scope of the Fields; provided,
however, that Symyx shall have the sole right to grant and authorize licenses
and sublicenses under such Joint Inventions to Third Parties outside of the
scope of the Fields. It is further understood and agreed that Symyx shall have
the right to grant Third Parties licenses under Joint Inventions outside of the
scope of the Field that are exclusive even as to TDCC and Symyx; provided, that
if Symyx grants such a license that is exclusive even as to TDCC and Symyx,
Symyx shall promptly notify TDCC in writing and shall pay to TDCC [******]
percent ([******] %) of up-front license fees and royalties payments received by
Symyx from such Third Party in respect of such exclusive license under such
Joint Inventions. Notwithstanding the foregoing, it is understood and agreed
that Symyx may grant exclusive licenses under such Joint Inventions outside of
the Fields to certain Third Parties in connection with the Other [******]
Research described in Section 2.3.2, and that Symyx shall not be required to pay
any amounts to TDCC hereunder in connection with such licenses. It is understood
and agreed that Confidential Information received by Symyx from TDCC shall be
subject to all applicable provisions of Article 9 of this Agreement.
4.5 Retained Rights.
4.5.1 Sole Inventions Outside the Fields. Subject to the license
to Combinatorial Chemistry Technology in Section 4.6, TDCC and Symyx shall each
retain all rights outside the scope of the Fields in and to inventions and
discoveries invented or made solely by such party in the course of the Research
Program.
4.5.2 Symyx Research. Notwithstanding the licenses and rights
granted by Symyx in this Article 4, Symyx shall retain the right to make, have
made, and use any Library Compounds or Agreement Compounds, and use or practice
any processes or methods developed by or on behalf of Symyx in the course of
performing the Research Program, for its own internal research to develop,
improve and validate its tools and Combinatorial Chemistry Technology.
4.6 Combinatorial Chemistry. TDCC agrees to grant, and hereby grants, to
Symyx an irrevocable, royalty-free non-exclusive license, with the right to
grant and authorize sublicenses,
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under TDCC's interest in Combinatorial Chemistry Technology made or invented
solely by TDCC in the course of the Research Program, to conduct activities
using Combinatorial Chemistry. TDCC, TDCC's Affiliates, Symyx and Symyx's
Affiliates shall each have the right to use Combinatorial Chemistry Technology
made or invented jointly by TDCC and Symyx in the course of the Research Program
for internal research purposes; provided, however, that Symyx shall have the
sole right to grant and authorize licenses and sublicenses to Third Parties
under such Combinatorial Chemistry Technology. It is understood that this
Section 4.6 shall not apply to any inventions conceived and reduced to practice
by TDCC independent of the Research Program and without use of, or reference to,
Combinatorial Chemistry Technology owned by Symyx, other than the use of and
reference to the Discovery Tools, if any, licensed or sold to TDCC as set forth
in Section 2.8. Nothing herein shall be construed to obligate TDCC to grant to
Symyx the right to use or sublicense background rights in technology of TDCC
which existed prior to the Effective Date or results of Independent TDCC
Research.
4.7 Limited Use Outside of Field. Except as the parties may otherwise
expressly agree in writing, TDCC shall not use or sell, or authorize the use or
sale of, Program Technology developed solely or jointly by Symyx, or any
Agreement Compound or Library Compound, except (i) in relation to the
manufacture, use or sale of Products within the corresponding Field or Fields in
accordance with the license granted by Symyx in Sections 4.1.1 [******]. It is
understood that this Section 4.7 does not preclude TDCC from the use or sale or
authorizing the use or sale of compounds developed independently by TDCC without
the use of Library Compounds, Confidential Information of Symyx, or Program
Technology.
ARTICLE 5
PAYMENTS
5.1 Research Funding.
5.1.1 [******]
5.1.2 Quarterly Payments. The amounts set forth in Section 5.1.1
shall be paid in advance in four equal installments during each year of the
Research Program. The initial payment shall be made on or before the 1st day of
the month following the Effective Date. Subsequent payments shall be made at
three month intervals thereafter on or before the first day of the applicable
month for the duration of the Research Program term. It is understood and agreed
that all such payments are nonrefundable and noncreditable, except as provided
in Article 12.
5.1.3 Research Program Records. Symyx shall keep complete, true
and accurate books of account and records sufficient to determine the number of
Symyx FTE's utilized, the number of experiments performed by Symyx in each
quarter during the Research Program Term in connection with the performance of
the Research. Such books and records shall be kept at the principal place of
business of Symyx for at least three (3) years following the end of the calendar
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year quarter to which they pertain. Such records will be open for inspection
during normal business hours upon ten (10) days prior notice during such three
(3) year period, by an independent auditor of TDCC, for the purpose of verifying
the number of Symyx FTE's used in the Research Program during the Research
Program Term, and the number of Program Experiments. Such inspections may be
made no more than once each calendar year, at reasonable times mutually agreed
by Symyx and TDCC. It is understood and agreed that TDCC's auditor will be
obliged to execute a reasonable confidentiality agreement prior to commencing
any such inspection.
5.2 Royalties.
5.2.1 [******]
(i) [******]
(ii) [******]
(iii) [******]
(iv) [******]
(v) [******]
(vi) [******]
(vii) Single Royalty Due. Where a Product is sold by
TDCC or its Affiliates to Third Parties and the Product is also converted by
TDCC or its Affiliates into another Product by processing, blending or
fabricating and the resulting converted Product sold, Net Sales shall be
determined on the Product initially made and only a royalty payment for such
initial Product shall be due. In the case of a transfer of Products between TDCC
and one of its Affiliates or between two Affiliates of TDCC for any purpose
other than research, development or sampling, Net Sales shall where feasible be
determined based on the invoiced sales price for substantially identical
Products upon sale to a Third Party customer in the territory or geographic
region where the Product is delivered, less the deductions allowed for such
sales. In the event that Products are transferred between an Affiliate of TDCC
and either TDCC or another Affiliate of TDCC and there have been no comparable
sales of such Products to a Third Party on which to determine a basis of
determining the value of such sale, the invoice price received from invoicing,
shipment or transfer of title in the Product to a person or entity other than
TDCC or its Affiliate, less allowed deductions, shall be used in determining Net
Sales. In the event a Product is sold by TDCC or an Affiliate in combination
with other goods and services, Net Sales of the Product shall also be determined
by reference to the average selling price of the Product without other goods and
services sold to Third Parties during the same time period.
(viii) [******]
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5.2.2 Royalty Term. TDCC's obligation to pay royalties to Symyx
shall continue for each class of Products until the later of (i) twelve (12)
years after the first commercial sale of any Product in such class of Products
on which royalties are payable by TDCC to Symyx, or (ii) the expiration of the
last to expire issued patent covering such Product based on the Program
Technology which is owned and/or controlled by TDCC or Symyx. Notwithstanding
any other provision of this Agreement, all royalty obligations of TDCC or its
sublicensee for all Products shall cease twenty (20) years from the date of the
first commercial sale of the first Product on which royalties are payable by
TDCC to Symyx.
5.3 Payments in Lieu of Royalties. Royalties due on Net Sales of
Products or classes of Products may be burdensome to calculate and report. TDCC
and Symyx in such cases will seek to negotiate an alternative basis for
calculation of consideration payable in lieu of running royalties on such
classes of Products, which both parties deem will result in a payment to Symyx
of an amount commensurate with the royalties otherwise payable under Section
5.2.
5.4 [******]
5.5 Third Party Royalties. Symyx shall not be responsible for payments
due to Third Parties for the manufacture, sale, or use of Products by TDCC or
its Affiliates or Sublicensees.
5.6 Convenience of the Parties. The parties acknowledge that Symyx may
not own or control patent applications or patents covering the manufacture, sale
or use of a particular Product; however, that parties agree that substantial
value is expected to be contributed by Symyx in accelerated identification, time
to market, enhanced probability of success, and the potential for multiple leads
and, for the convenience of the parties, TDCC agrees to pay royalties as
specified herein during the applicable royalty period, regardless of whether a
Product is covered by a patent application or patent owned or controlled by
Symyx.
5.7 Separate Agreement. Although not a part of the Research Program, it
is understood and agreed that the amounts paid pursuant to Sections 5.1 and 5.4
shall include the consideration due Symyx from TDCC for evaluations to be
conducted by TDCC for screening [******] under a separate agreement to be
negotiated in good faith; provided, it is further understood and agreed that
Symyx will not be obligated to provide more than [******] of [******] FTE or the
equivalent, [******] under the terms of such separate agreement, and Symyx will
be obligated under such separate agreement only for so long as TDCC is not in
default under any payment due Symyx under this Agreement.
ARTICLE 6
PAYMENTS; BOOKS AND RECORDS
6.1 Royalty Reports and Payments. After the first commercial sale of a
Product on which royalties are payable by TDCC or its Affiliates hereunder, TDCC
shall make quarterly written reports to Symyx within ninety (90) days after the
end of each calendar year quarter, stating in each
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such report, separately for TDCC and each Affiliate, the number, description,
and aggregate Net Sales, of each Product or class of Products sold during the
calendar year quarter upon which a royalty is payable under Section 5.2.
Concurrently with the making of such reports, TDCC shall pay to Symyx all
royalties due in respect of such Net Sales at the rate determined in accordance
with Section 5.2.
6.2 Payment Method. All payments due under this Agreement shall be made
by bank wire transfer in immediately available funds to a bank account
designated by Symyx. All payments hereunder shall be made in U.S. dollars. Any
payments that are not paid on the date such payments are due under this
Agreement or any refunds for overpayments or underpayments of actual royalties
pursuant to Section 5.2.1(i) shall bear interest at the lesser of (i) the prime
rate (as reported by the Bank of America, San Francisco, California, on the date
such payment is due) plus an additional two percent (2%) or (ii) the maximum
rate permitted by law, in each case calculated on the number of days such
payment is delinquent. Nothing in this Section 6.2 shall prejudice any other
rights or remedies available to either party hereunder or at law or equity.
6.3 Place of Royalty Payment and Currency Conversions. Royalties shall
be deemed payable by the entity making the Net Sales of the Product from the
country in which earned in local currency and subject to foreign exchange
regulations then prevailing. Royalty payments to Symyx shall be made in United
States dollars to the extent that free conversion to United States dollars is
permitted. Any such conversion to U.S. dollars from the currency in the country
where such Net Sales occurs shall be made using the exchange rate for conversion
of the foreign currency into U.S. Dollars employed by TDCC in the normal course
of its business for other commercial transactions on the last business day of
the calendar year quarter to which such payment pertains. If, due to
restrictions or prohibitions imposed by national or international authority,
payments cannot be made as aforesaid, the parties shall consult with a view to
finding a prompt and acceptable solution. If such royalties due Symyx in any
country cannot be remitted to Symyx within six (6) months after the end of the
calendar year quarter during which they are earned, then TDCC or its Affiliate
shall upon request of Symyx deposit the full amount of such unpaid royalties in
a bank account in such country in the name of Symyx.
6.4 Records; Inspection. TDCC and its Affiliates shall keep complete,
true and accurate books of account and records for the purpose of determining
the royalty amounts (and revenues received from Sublicensees) which are payable
to Symyx under this Agreement. Such books and records shall be kept at the
principal place of business of such party, as the case may be, for at least
three (3) years following the end of the calendar year quarter to which they
pertain. Such records will be open for inspection during such three (3) year
period by a public accounting firm to whom TDCC has no reasonable objection,
solely for the purpose of verifying royalty reports provided pursuant to Section
6.1. Such inspections may be made no more than once each calendar year, at
reasonable times and on reasonable notice. Inspections conducted under this
Section 6.4 shall be at the expense of Symyx, unless a variation or error
producing an increase in the payment due exceeding the greater of ten thousand
U.S. dollars ($10,000) or ten percent (10%) of the amount stated for any period
covered by the inspection is established in the course of any such inspection,
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whereupon all reasonable costs relating to the inspection for such period and
any unpaid amounts that are discovered will be paid promptly by TDCC or the
Affiliate together with interest thereon from the date such payments were due at
the lesser of (i) the prime rate (as reported by the Bank of America, San
Francisco, California), plus an additional two percent (2%) or (ii) the maximum
rate permitted by law. The public accounting firm employees shall sign a
reasonable confidentiality agreement as a condition precedent to their
inspection, and shall report to Symyx only that information which would be
contained in a properly prepared royalty report by TDCC. Symyx agrees to hold in
strict confidence all information received concerning royalty payments and
reports, and all information learned in the course of any audit or inspection,
except to the extent necessary for Symyx to reveal such information in order to
enforce its rights under this Agreement or if disclosure is required by law.
6.5 Tax Matters. All royalty amounts and other payments required to be
paid to a party pursuant to this Agreement may be paid with deduction for
withholding for or on account of any taxes (other than taxes imposed on or
measured by net income) or similar governmental charge imposed by applicable law
("Withholding Taxes"). Any Withholding Taxes will be paid to the proper tax
authorities and receipts for such payment or other proof of payment will be made
available by the paying party to the other party. The parties will exercise
diligent efforts to ensure that any withholding taxes imposed are reduced as far
as possible under provisions of any treaties applicable.
ARTICLE 7
INTELLECTUAL PROPERTY
7.1 Ownership. TDCC shall own any inventions or discoveries conceived
and reduced to practice and other intellectual property otherwise developed
solely by personnel of TDCC or TDCC's Affiliates in the course of the Research
Program and shall also own inventions and discoveries fully conceived (with
sufficient specificity that it can be reduced to practice without efforts beyond
those efforts that one skilled on the art would reasonably employ) by personnel
of TDCC or TDCC's Affiliates and reduced to practice in the course of the
Research program by Symyx and TDCC consistent with such conception, which
pertain to [******] (collectively, "TDCC Inventions"). Symyx shall own any
inventions or discoveries conceived and reduced to practice and other
intellectual property otherwise developed solely by Symyx personnel in the
course of the Research Program ("Symyx Inventions"). Except as provided above,
TDCC and Symyx shall jointly own any inventions or discoveries conceived and/or
reduced to practice in the course of the Research Program where personnel of
Symyx and of TDCC have each made inventive contributions to such inventions
which would result in them being determined to be joint inventors in accordance
with United States patent law ("Joint Inventions"). Program Know-How which is
jointly developed but is not deemed to be patentable will be jointly owned.
7.2 Notice of Inventions and Access to Records of the Research Program.
Symyx and TDCC shall report to the Research Committee all inventions relating to
Lead Compounds,
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Derivative Compounds, or Program Technology made in the course of performing the
Research Program. During the Research Program Term and for three (3) years
thereafter, each of TDCC and Symyx shall make available to the other party upon
request research records pertaining to such inventions as may be reasonably
required to exercise any rights of a party arising pursuant to this Agreement.
Such records and the information disclosed therein shall be deemed Confidential
Information of the party providing such records for inspection subject to the
obligations and conditions in Article 9. Upon request and tender of payment for
the actual cost in providing copies, Symyx and/or TDCC, as appropriate, shall
provide to the requesting party legible copies of such records as are reasonably
required.
7.3 Jointly Owned IP. Except as otherwise expressly provided in this
Agreement, both TDCC and Symyx may use, sublicense, commercialize, or otherwise
exploit all jointly-owned Program Technology without the consent of, or
obligation to account to, the other party.
7.4 Patent Prosecution.
7.4.1 Solely-Owned Patents. Each party will be responsible, in
its discretion and at its sole expense, for preparing, filing, prosecuting and
maintaining patent applications and patents relating to the inventions conceived
or reduced to practice in the course of the Research Program that are owned
solely by that party as described in Section 7.1, and conducting any
interferences, re-examinations, reissues, oppositions or requests for patent
term extension or governmental equivalents thereto.
7.4.2 Jointly-Owned Patents.
(a) Combinatorial Chemistry. Symyx shall have the sole right, in
its discretion and at its sole expense, to prepare, file, prosecute and maintain
patent applications and patents relating to Joint Inventions owned by TDCC and
Symyx which claim Combinatorial Chemistry Technology and to conduct any
interferences, re-examinations, reissues, oppositions or requests for patent
term extension or governmental equivalents thereto.
(b) Jointly-Owned Patents Related to Specific Fields. Except as
provided in Section 7.4.2 (a), TDCC shall have the first right, in its
discretion and at its sole expense, to prepare, file, prosecute and maintain, in
consultation with Symyx, patent applications and patents relating to Joint
Inventions within the Program Technology in the first, second and fourth Fields
in Exhibit A which (i) relate to the use of Agreement Compounds to make Products
in one or more of such Fields, or (ii) relate to Products in (or used in) one or
more such Fields or (iii) relate to processes for making Products in one or more
such Fields, in each case that are jointly-owned by TDCC and Symyx, and to
conduct any interferences, re-examinations, reissues, oppositions or requests
for patent term extension or governmental equivalents thereto. In the event that
TDCC does not file, prosecute or maintain, or conduct such other activities
described above, with respect to any such patent or patent application which
claims the composition or method of use of any Agreement Compound in the Field,
Symyx will have the right, in its discretion, to assume such activities at its
own expense. It is understood and agreed that in the event a Joint Invention as
it will be filed in a
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patent application or claimed in a patent encompasses Program Technology in one
or more of the third, fifth or sixth fields in Exhibit A in addition to the
first, second or fourth Fields of Exhibit A, then Section 7.4.2(c) shall apply.
(c) Jointly-Owned Patents Outside of the Specified Fields.
Except as provided in Section 7.4.2 (a) and (b), Symyx shall have the first
right, in its discretion and at its sole expense, to prepare, file, prosecute
and maintain, in consultation with TDCC, patent applications and patents
relating to Joint Inventions within the Program Technology that are
jointly-owned by TDCC and Symyx, and to conduct any interferences,
re-examinations, reissues, oppositions or requests for patent term extension or
governmental equivalents thereto. In the event that Symyx does not file,
prosecute or maintain, or conduct such other activities described above, with
respect to any such patent or patent application, TDCC will have the right, in
its discretion, to assume such activities at its own expense.
7.5 Cooperation in Patent Filing. During the Research Program Term and
for three years thereafter, TDCC and Symyx shall use reasonable efforts to keep
each other informed as to the status of patent matters described in this Article
7, including without limitation, by providing the other the opportunity to
review and comment on patent application drafts providing the basis for Program
Patents claiming inventions made in the course of the Research Program a
reasonable time in advance of applicable filing dates, and providing the other
party with copies of any substantive documents that such party receives from
applicable patent offices regarding applications for any Program Patent, and/or
applications claiming any Joint Inventions, promptly after receipt, including
notice of all official actions, interferences, reissues, re-examinations,
oppositions, potential litigation, or requests for patent term extensions. TDCC
and Symyx shall each reasonably cooperate with and assist the other at its own
expense in connection with such activities, at the other party's request. The
Research Committee, either directly or through a patent committee designated by
the Research Committee, will (i) facilitate communication between the parties
regarding patents and patent applications arising from inventions made in the
course of the Research Program, and (ii) discuss and provide advice on patent
strategy related to such patent applications. It is understood and agreed that
provisional patent applications may be filed by a party without review and
comment in order to obtain the earliest possible filing date, but each party
will use commercially reasonable efforts to seek review and comment from the
other party prior to filing such provisional patent applications.
7.6 Enforcement.
7.6.1 Notice. Each party shall promptly notify the other party
in writing if it becomes aware of any actual or threatened commercially material
infringement of the Program Patents by a Third Party.
7.6.2 Inside the Fields. TDCC shall have the initial right, but
not the obligation, to take appropriate legal action to enforce any Program
Patents against any infringement within the Fields by any Third Party, at its
sole cost and expense. If, within six (6) months following receipt of notice
from Symyx of any such infringement of a jointly-owned, issued patent, TDCC does
not take
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such action to halt such infringement or notify Symyx of action it proposes to
take to abate patent infringement in a commercially reasonable period, Symyx
shall, in its sole discretion, have the right, but not the obligation to take
such action at its sole expense.
7.6.3 Other Infringement. In the event of an actual or
threatened infringement by a Third Party of a Program Patent that is solely
owned by TDCC, TDCC shall have the sole right, but not the obligation, to take
appropriate legal action to enforce such Program Patent against infringements by
Third Parties, as TDCC determines and at its expense. Except as otherwise
provided in Section 7.6.2, in the event of an actual or threatened infringement
by a Third Party of a Program Patent that is solely owned by Symyx, or jointly
by TDCC and Symyx, Symyx shall have the sole right, but not the obligation, to
take appropriate legal action to enforce such Program Patent against
infringement by Third Parties, as Symyx determines in its discretion and at its
expense. It is understood that Symyx may authorize one or more Third Parties to
enforce patents against infringements outside of the Fields.
7.6.4 Cooperation; Costs and Recoveries; Settlements. Each party
agrees to use commercially reasonable efforts to render such assistance in the
enforcement activities described in Sections 7.6.2 and 7.6.3 as the enforcing
party may reasonably request. Costs of maintaining any such action and damages
recovered therefrom shall be paid by and belong to the party bringing the
action; provided, however, that any recovery by TDCC under Section 7.6.2 in
excess of TDCC's actual cost and expenses shall be divided [******] percent
([******] %) to TDCC and [******] (%) to Symyx. If TDCC consents to a sublicense
to any Third Party, which consent it shall not be required to give, who, but for
the sublicense, would be infringing a claim of an issued patent in the Program
Technology, TDCC shall be entitled to receive all running royalties payable by
such Third Party but such revenue received in excess of TDCC's actual costs and
expenses for enforcement shall be included as a part of revenues received from
Sublicensees as set forth in Section 5.2.1(iv). Neither Symyx nor TDCC shall
settle without the consent of the other party a dispute with a Third Party
regarding infringement of a Program Patent except to the extent that such rights
could have been granted as a permitted license or sublicense without the consent
of the other party.
7.7 Third Party Claims of Infringement. If the manufacture, use or sale
of any Product pursuant to this Agreement because of the practice of the Program
Technology results in any claim, suit or proceeding alleging patent infringement
against Symyx or TDCC (or its Affiliates or Sublicensees), such party shall
promptly notify the other party hereto in writing setting forth the facts of
such claims in reasonable detail. Each party agrees to use commercially
reasonable efforts to render assistance to the other party in defending such
claims of infringement as the defendant may reasonably request. The defendant
shall have the exclusive right and obligation to defend and control the defense
of any such claim, suit or proceeding, at its own expense, using counsel of its
own choice; provided, however, it shall not enter into any settlement which
admits or concedes that any Program Patent is invalid or unenforceable, without
the prior written consent of the other party, which shall not be unreasonably
withheld. The defendant shall keep the other party hereto reasonably informed of
all material developments in connection with any such claim, suit or proceeding.
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ARTICLE 8
COMMERCIALIZATION
8.1 Due Diligence. TDCC shall use commercially reasonable efforts to
develop and commercialize Agreement Compounds and Products which in TDCC's sound
business judgment can be profitably implemented. It is understood and agreed
that such "commercially reasonable efforts" shall mean efforts generally
equivalent to the efforts TDCC uses with regard to its other similar products
(lower case) of comparable value, risk and patent protection to develop and
commercialize Products. Specific diligence parameters will include [******]
8.2 [******]
8.3 Reports. During the term of this Agreement, TDCC shall provide Symyx
with written annual reports within thirty (30) days of the end of each calendar
year providing a summary of the status of the research and development
activities conducted with respect to Products and Agreement Compounds. In
addition, five (5) times during the term of this Agreement, Symyx may request
special reports which provide a summary of the status of the research and
development activities conducted with respect to Products and Agreement
Compounds. TDCC will provide these special reports within thirty (30) days of
notification. The reports as described in this Section 8.3 shall contain
sufficient information to allow Symyx to monitor TDCC's compliance with this
Agreement. All reports and information provided under this Section 8.3 shall be
deemed Confidential Information of TDCC.
ARTICLE 9
CONFIDENTIALITY
9.1 Confidentiality. Except as otherwise expressly provided herein, the
parties agree that, until the later of fifteen (15) years from the Effective
Date of the Agreement and (ii) ten (10) years from the end of the Research
Program, the receiving party shall not, except as expressly provided in this
Article 9, disclose to any Third Party or use for any purpose, any Confidential
Information furnished to it by the disclosing party pursuant to this Agreement,
except in each case to the extent that it can be established by the receiving
party by competent proof that such information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after it disclosure and other than through any act or
omission of the receiving party in breach of this agreement;
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(d) was independently developed by the receiving party without
use of, or reference to, the other party's confidential information, as
demonstrated by documented evidence; or
(e) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a Third Party authorized and entitled to
disclose such information to others.
9.2 Permitted Use and Disclosures. Each party hereto may (i) use
Confidential Information disclosed to it by the other party in conducting the
Research Program and (ii) use or disclose Confidential Information disclosed to
it by the other party to the extent such use and disclosure is reasonably
necessary in (A) exercising the rights and licenses granted hereunder, (B)
prosecuting or defending litigation, (C) complying with applicable laws,
governmental regulations or court orders or submitting mandatory information to
tax or other governmental authorities, (D) filing and prosecuting patent
applications, subject to consultation with the disclosing party as to the
content of such patent applications prior to filing, or (E) making a permitted
sublicense or otherwise exercising license rights expressly granted pursuant to
this Agreement. TDCC and Symyx shall not (and agree that their Affiliates shall
not) disclose Confidential Information received from the other party under this
Agreement as permitted by 9.2(ii)(A) or (E), except pursuant to an agreement of
confidentiality with terms reasonably equivalent to those applicable to the
party to this Agreement that received the information from the other. If a party
to this Agreement is required to make any disclosure pursuant to 9.2(ii)(B), (C)
or (D) of Confidential Information received, it will give reasonable advance
notice to the other party to this Agreement and will use reasonable efforts to
secure confidential treatment of such information (whether through protective
order or otherwise), except to the extent inappropriate in the case of patent
applications.
9.3 Nondisclosure of Terms. Each of the parties hereto agrees not to
disclose the terms of this Agreement to any Third Party without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld, except to such party's attorneys, advisors, investors and
others on a need to know basis under circumstances that reasonably ensure the
confidentiality thereof either: (i) in connection with a public offering of
Symyx stock, (ii) in connection with negotiation of a sublicense, manufacture or
sale of a Product or an Agreement Compound, or (iii) to the extent required by
law. Notwithstanding the foregoing, the parties shall agree upon a press release
to announce the execution of this Agreement, and Symyx and TDCC may each
thereafter disclose to Third Parties the information contained in such press
release without the need for further approval by the other. In addition, TDCC
and Symyx may each make public statements regarding the general progress of the
Research Program.
9.4 Publication of Results. Any manuscript or other public disclosure by
Symyx or TDCC describing the scientific results of the Research Program to be
published within the Research Program Term, or within one (1) year after the end
of the Research Program, shall be provided to the other party for review at
least ninety (90) days prior to its submission, except that patent applications
which may be published shall be subject only to the review described in Section
7.5. Further, to avoid the loss of patent rights as a result of premature public
disclosure of patentable information, the reviewing party may, within thirty
(30) days of receiving such a proposed disclosure, notify the
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publishing party in writing that the reviewing party desires to file a patent
application on any invention disclosed in such scientific results, in which case
the publishing party shall withhold publication or disclosure of such scientific
results until the earlier of (i) the time the patent application is filed
thereon, (ii) the time the parties both determine, after consultation, that no
patentable invention exists, or (iii) ninety (90) days after the publishing
party received notice of the reviewing party's desire to file such patent
application. Further, if such scientific results contain Confidential
Information of the reviewing party that is subject to the use and nondisclosure
restrictions under this Article 9, the publishing party agrees to remove such
Confidential Information from the proposed publication or disclosure.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 TDCC's Representations. TDCC represents and warrants that: (i) it
has the right and authority to enter into this Agreement and to fully perform
its obligations hereunder; (ii) this Agreement is a legal and valid obligation
binding upon it and enforceable in accordance with its terms, and (iii) it has
not previously granted, and during the term of this Agreement will not knowingly
make any commitment or grant any rights which conflict in any material way with
the rights and obligations set forth herein.
10.2 Symyx's Representations. Symyx represents and warrants that: (i) it
has the right and authority to enter into this Agreement, and to fully perform
its obligations hereunder; (ii) this Agreement is a legal and valid obligation
binding upon it and enforceable in accordance with its terms; (iii) it has not
previously granted, and during the term of this Agreement will not knowingly
make any commitment or grant any rights which conflict in any material way with
the rights and obligations set forth herein; (iv) it has the right to extend the
rights granted by it in this Agreement; and (v) to the best of its knowledge as
of the Effective Date, there are no existing or threatened actions, suits or
claims pending against it with respect to the Confidential Information,
Combinatorial Chemistry Technology or Library Compounds to be used in the
Research Program.
10.3 Disclaimer. TDCC and Symyx specifically disclaim any
representation, warranty or guarantee that the Research Program will be
successful, in whole or in part. It is understood that the failure of the
parties to successfully synthesize, discover, identify or optimize Agreement
Compounds in the course of the Research Program shall not constitute a breach of
any representation or warranty or other obligation under this Agreement;
provided, however, it is understood and agreed that the foregoing shall not be
construed so as to relieve either party from its obligation under this Agreement
to perform research activities in the Research Program. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT, SYMYX AND TDCC MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROGRAM TECHNOLOGY, INFORMATION DISCLOSED HEREUNDER, LIBRARY
COMPOUNDS, AGREEMENT COMPOUNDS, OR PRODUCTS, AND HEREBY EXPRESSLY DISCLAIM ANY
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WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY
OF ANY PROGRAM TECHNOLOGY, PATENTED OR UNPATENTED, OR NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
ARTICLE 11
INDEMNIFICATION
11.1 TDCC. TDCC agrees to indemnify, defend and hold harmless Symyx and
its Affiliates and their respective directors, officers, employees, agents and
their respective successors, heirs and assigns (the "Symyx Indemnitees") from
and against any losses, costs, reasonable expense from lost time of Symyx
employees, claims, damages, liabilities or expense (including reasonable
attorneys' and professional fees and other expenses of litigation)
(collectively, "Liabilities") arising, directly or indirectly out of or in
connection with Third Party claims, suits, actions, demands or judgments,
including without limitation, personal injury, product liability, patent
infringement and trade secret misappropriation matters, suits, actions or
demands relating to (i) any Agreement Compounds or Products which are developed,
manufactured, used, sold or otherwise distributed by or on behalf of TDCC, its
Affiliates, Sublicensees or other designees (other than Symyx, its Affiliates
and licensees), (ii) TDCC's activities in performing the Research Program, (iii)
Symyx's research activities in performing the Research Program arising in
circumstances where TDCC has directed these activities pursuant to Section 3.6,
and (iv) any breach by TDCC of the representations and warranties made in this
Agreement, except, in each case, to the extent such Liabilities result from the
negligence or intentional misconduct of the Symyx Indemnitees. Except as
expressly set forth herein regarding reasonable expenses from lost time of Symyx
employees, indemnification hereunder does not include any consequential damages
or lost profits which may be suffered by the Symyx Indemnitees.
11.2 Symyx. Symyx agrees to indemnify, defend and hold harmless TDCC,
its Affiliates and Sublicensees and their respective directors, officers,
employees, agents and their respective heirs and assigns (the "TDCC
Indemnitees") from and against any losses, costs, claims, damages, liabilities
or expense (including reasonable attorneys' and professional fees and other
expenses of litigation) (collectively, "Liabilities") arising, directly or
indirectly out of or in connection with Third Party claims, suits, actions,
demands or judgments, including without limitation, personal injury, product
liability, patent infringement and trade secret misappropriation matters, suits,
actions, or demands relating to (i) any Library Compound or product (lower case)
developed, manufactured, used, sold or otherwise distributed by or on behalf of
Symyx, its Affiliates, licensees or other designees (other than TDCC, its
Affiliates and Sublicensees), (ii) any breach by Symyx of its representations
and warranties made in this Agreement, and (iii) Symyx's activities in
performing the Research Program other than those where TDCC directed such
activities pursuant to Section 3.6 (except with respect to claims of
infringement of the intellectual property rights of Third Parties, in which
event Symyx shall not be obligated to indemnify TDCC); and except, in each case,
to the extent such Liabilities result from the negligence or intentional
misconduct of the TDCC
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Indemnitees. Indemnification hereunder does not include any consequential
damages or lost profits which may be suffered by the TDCC Indemnitees.
11.3 Procedure. In the event that any "Indemnitee" (either a TDCC
Indemnitee as described in Section 11.2 or a Symyx Indemnitee as described in
Section 11.1) intends to claim indemnification under this Article 11 it shall
promptly notify the other party in writing of such alleged Liability. The
indemnifying party shall have the right to control the defense thereof with
counsel of its choice that is reasonably acceptable to Indemnitee; provided,
however, that any Indemnitee shall have the right to retain its own counsel at
its own expense for any reason. The affected Indemnitee shall give reasonable
cooperation to the indemnifying party and its legal representatives in the
investigation of any action, claim or liability covered by this Article 11. The
indemnification under this Article 11 shall not apply to amounts paid by an
Indemnitee in settlement of any Liabilities if such settlement is effected
without the consent of the indemnifying party, which consent shall not be
withheld unreasonably. The failure of the Indemnitee to deliver notice to the
indemnifying party within a reasonable time after commencement of a claim or
action, if prejudicial to the ability to defend such claim or action, shall
relieve the indemnifying party of any liability under this Article 11 to the
extent of such prejudice. The indemnifying party will not be liable to pay legal
costs and attorney's fees incurred by the Indemnitee in establishing its claim
for indemnification.
ARTICLE 12
TERM AND TERMINATION
12.1 Term of Agreement. The term of this Agreement shall commence on the
Effective Date, and shall continue in full force and effect on a
country-by-country, Agreement Compound-by-Agreement Compound and Product by
Product basis, until TDCC and its Affiliates have no remaining royalty payment
obligations for such Agreement Compound or Product in such country, unless
terminated earlier as provided in this Article 12. Following the expiration of
this Agreement pursuant to this Section 12.1, but not the earlier termination of
this Agreement pursuant to Section 12.2 or 12.3, with respect to an Agreement
Compound or Product in a country, TDCC shall have a nonexclusive license under
Symyx's interest in the Program Technology to make, have made, use, sell, offer
to sell and import such Agreement Compound or Product in such country.
12.2 Breach.
12.2.1 Termination of Agreement. Either party to this Agreement
may terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such default shall have continued for thirty (30) days after
written notice thereof was provided to the breaching party by the non-breaching
party. Any termination shall become effective at the end of such thirty (30) day
period unless the breaching party (or any other party on its behalf) has cured
any such material breach or default prior to the expiration of the thirty (30)
day period. In the event that TDCC has materially breached this Agreement solely
with respect to an Agreement Compound or Product within a specific Field, then
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Symyx shall only be entitled to terminate this Agreement with respect to such
Field as a result of such breach. Any dispute as to whether or not a material
breach or default has occurred or has been timely cured shall be subject to
dispute resolution in accordance with Section 13.16.
12.2.2 Termination of Research Program for Breach. In the event
that Symyx shall have materially breached or defaulted in the performance of any
of its material obligations hereunder during the Research Program Term, and such
default shall have continued for thirty (30) days after written notice thereof
was provided to Symyx by TDCC, TDCC may elect to terminate the Research Program
and not the Agreement, upon written notice to Symyx clearly stating TDCC's
election. Any termination of the Research Program and not the Agreement shall
become effective at the end of such thirty (30) day period unless Symyx (or any
other party on its behalf) has cured any such breach or default prior to the
expiration of the thirty (30) day period or TDCC elects not to terminate the
Research Program. In the event that TDCC properly terminates the Research
Program and not the Agreement, TDCC shall have no further obligation to make the
payments otherwise due Symyx under Section 5.1 after the effective date of such
termination of the Research Program. In the event that Symyx has materially
breached or defaulted during the Research Program Term and TDCC has provided to
Symyx notice of such material breach or default, and of TDCC's intent to
terminate the Research Program if such material breach or default is not cured
within the applicable 30-day cure period, TDCC may, upon prior notice to Symyx,
suspend payments that would otherwise be due to Symyx under Section 5.1 during
such 30-day cure period; provided, however, that (i) TDCC shall only be entitled
to suspend payments as described herein one (1) time during the Research Program
Term; (ii) in the event the Research Program is terminated, TDCC shall have no
rights or license in or to Program Technology developed by Symyx during the
period for which such payments were suspended; and (iii) in the event that Symyx
cures such breach or default (or TDCC waives such breach or default) and the
Research Program is not terminated, TDCC shall pay to Symyx the full amount that
would have been due under Section 5.1 plus interest to be calculated as provided
in Section 6.2 within fifteen (15) business days of the earlier of (i) the date
such cure is notified to TDCC, (ii) the date of a waiver by TDCC, or (iii) the
end of the thirty (30) day cure period.
12.2.3 Other Remedies for Breach. It is understood that in the
event that a party has breached or defaulted in performance of any of its
obligations hereunder and such breach or default shall have continued for thirty
(30) days after written notice thereof was provided to the breaching party by
the non-breaching party, the non-breaching party may elect to seek such specific
performance and/or monetary damages or rescission as the non-breaching party may
be entitled at law or equity, if any, pursuant to Section 13.16.
12.3 Termination for Insolvency. If voluntary or involuntary proceedings
by or against a party are instituted in bankruptcy under any insolvency law, or
a receiver or custodian is appointed for such party, or proceedings are
instituted by or against such party for corporate reorganization, dissolution,
liquidation or winding-up of such party, which proceedings, if involuntary,
shall not have been dismissed within sixty (60) days after the date of filing,
or if such party makes an assignment for the benefit of creditors, or
substantially all of the assets of such party are seized or attached and not
released within sixty (60) days thereafter, the other party may immediately
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<PAGE> 28
terminate this Agreement effective upon notice of such termination or in the
event Symyx is involved in insolvency proceedings during the Research Program
Term, TDCC may elect to terminate the Research Program and not the Agreement
upon notice to Symyx.
12.4 [******]
12.5 Effect of Termination.
12.5.1 Accrued Rights and Obligations. Termination of this
Agreement for any reason shall not release either party hereto from any
liability or obligation which, at the time of such termination, has already
accrued to the other party or which is attributable to a period prior to such
termination nor preclude either party from pursuing any rights and remedies it
may have hereunder or at law or in equity with respect to any breach of this
Agreement.
12.5.2 Return of Confidential Information. Upon any termination
of this Agreement prior to fifteen (15) years from the Effective Date or
rescission of the Agreement pursuant to Section 12.2.4, TDCC and Symyx shall
promptly return to the other all Confidential Information received from the
other party (except one copy of which may be retained for archival purposes and
ensuring compliance with the provisions of Article 9).
12.5.3 Termination of the Research Program. In the event the
Research Program (and not the Agreement) is properly terminated by TDCC as
provided in Sections 2.9, 12.2.2, 12.3 or 12.4, earlier than three (3) years
after the Effective Date, TDCC shall have no further obligation to make the
payments otherwise due to Symyx under Section 5.1 following the effective date
of such termination. On request from TDCC, Symyx shall engage in an orderly
transfer to TDCC of information and data from the Program Technology developed
before the effective date of such termination. It is understood and agreed that
Symyx shall have the right, in its discretion, to continue research activities
in the Field, either on its own or with a Third Party, following any such
termination.
12.5.4 [******]
12.5.5 Licenses.
(i) Termination of Agreement by TDCC. In the event of
any termination of the Agreement by TDCC pursuant to Section 12.2.1 or 12.3, the
licenses granted by Symyx in Section 4.1 shall terminate. It is understood that
if Symyx has granted any permitted sublicense or license to a Third Party under
Section 4.4 prior to the effective date of such termination, then such
sublicense or license shall not be effected and shall continue in accordance
with its terms with revenues to be shared as if this Agreement remained in
effect.
(ii) Termination of Research Program But Not Agreement.
In the event TDCC terminates the Research Program and not the Agreement as set
forth in Section 2.9, 12.2.2, 12.3 or 12.4, then the licenses in Section 4.1,
sublicenses in Section 4.2 and rights in Joint Inventions under
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Section 4.4 shall remain in effect with respect to all Program Technology made,
or conceived and reduced to practice before the effective date of such
termination; provided, however, that (i) such licenses and rights shall not
include any interest or right in or to Program Technology (or other intellectual
property made, or conceived or reduced to practice by Symyx) after the effective
date of such termination, and (ii) Section 4.1.3 shall terminate on the
effective date of such termination.
(iii) Termination by Symyx. In the event of termination
by Symyx under Sections 12.2 or 12.3, the license set forth in Section 4.1 shall
terminate; provided, however, that if the breach relates solely to an Agreement
Compound or Product in a specific Field, then Symyx shall only terminate the
licenses to TDCC with respect to the Agreement Compounds and Products in such
Field, and the remaining licenses granted to TDCC and to Symyx hereunder shall
remain in effect, subject to all the terms and conditions of this Agreement. If
a party to this Agreement has granted any permitted sublicense or license to a
Third Party prior to the effective date of such termination, then such
sublicense or license shall not be effected and shall continue in accordance
with its terms with revenues to be shared as if this Agreement remained in
effect.
12.6 Survival. Sections 2.7, 4.3, 4.4, 4.5, 4.6, 5.5, 7.1, 12.5, 12.6,
13.1, 13.2, 13.5, 13.6, 13.10, 13.11, 13.16, and 13.17, and Articles 9 and 11 of
this Agreement shall survive the expiration or termination of this Agreement for
any reason. [******]
ARTICLE 13
MISCELLANEOUS
13.1 Governing Laws. This Agreement and any dispute arising from the
construction, performance or breach hereof shall be governed by and construed
and enforced in accordance with, the laws of the state of Delaware, without
reference to conflicts of laws principles.
13.2 No Implied Licenses. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be created by implication, estoppel or otherwise.
13.3 Waiver. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
13.4 Assignment. This Agreement shall not be assignable by either party
to any Third Party without the written consent of the other party hereto, except
either party may assign this Agreement, without such consent, to an Affiliate or
to an entity that acquires all or substantially all of the business or assets of
the assigning party relating to the subject matter of this Agreement, whether by
merger, reorganization, acquisition, sale, or otherwise, subject to Section
12.4. This Agreement shall be binding upon and accrue to the benefit any
permitted assignee, and any such assignee shall agree to perform the obligation
of the assignor.
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13.5 Independent contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint ventures of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
13.6 Representation by Legal Counsel. Each party hereto represents that
it has been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the parties agree that
no presumption shall exist or be implied against the party which initially
drafted such terms and provisions.
13.7 Solicitation of Employees. TDCC and Symyx both agree that they will
not, during the Research Program Term, actively recruit or solicit employment of
any scientific or technical personnel of the other party involved in the
Research Program [******] . It is understood that the foregoing restriction
shall not apply to, or be breached by: (i) advertising open positions,
participating in job fairs, and conducting comparable activities to recruit
skilled or unskilled help from the general public, or responding to individuals
contacted through such methods, (ii) responding to unsolicited inquiries about
employment opportunities or possibilities from job placement agencies or other
agents acting for unidentified principals, or (iii) responding to unsolicited
inquiries about employment opportunities from any individual.
13.8 TDCC Affiliates. It is understood and agreed that TDCC may at its
sole discretion fulfill some or all of its obligations by or through its
Affiliates, and that TDCC may grant sublicenses under the Program Technology to
its Affiliates subject to the terms and conditions of this Agreement. TDCC
hereby warrants and guarantees the performance by its Affiliates of, and shall
remain jointly and severally liable for, all applicable obligations of its
Affiliates under this Agreement, including without limitation, the payment of
applicable royalties.
13.9 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of rights under this
license including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import, use, export and sale of Products
or Agreement Compounds pursuant to this Agreement.
13.10 Export Control Regulations. The rights and obligations of the
parties under this Agreement, shall be subject in all respects to United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad, including the United States Foreign Assets
Control Regulations, Transaction Control Regulations and Export Control
Regulations, as amended, and any successor legislation issued by the Department
of Commerce, International Trade Administration, or Office of Export Licensing.
Without in any way limiting the provisions of this Agreement, each party hereto
agrees that, unless prior authorization is obtained from the Office of Export
Licensing, it shall not export, reexport, or transship, directly or indirectly,
to any country, any of the technical data disclosed to it by the other party if
such export would
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<PAGE> 31
violate the laws of the United States or the regulations of any department or
agency of the United States Government. This provision shall survive termination
of this Agreement.
13.11 Headings. The captions to the several Sections hereof are not part
of this Agreement, but are included merely for convenience of reference and
shall not affect its meaning or interpretation.
13.12 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be hand delivered, or sent by express delivery
service with confirmation of receipt, or sent by registered or certified mail,
return receipt requested, postage prepaid, or by facsimile transmission (with
written confirmation copy by registered first-class mail), in each case to the
respective address or facsimile number indicated below.
Symyx: Symyx Technologies
3100 Central Expressway
Santa Clara, CA 95051
Attn: President & COO
Fax: (408) 764-2004
TDCC: The Dow Chemical Company
Patent Department, 1790 Building
Midland, MI 48674
Attn: General Patent Counsel
Fax: (517) 636-7592
Any such notice shall be deemed to have been given when received. Either party
may change its address or facsimile number by giving the other party written
notice, delivered in accordance with this Section.
13.13 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect to
the fullest extent permitted by law without said provision, and the parties
shall amend the Agreement to the extent feasible to lawfully include the
substance of the excluded term to as fully as possible realize the intent of the
parties and their commercial bargain.
13.14 Force Majeure. Neither party shall lose any rights hereunder or be
liable to the other party for damages or losses (except for payment obligations)
on account of failure of performance by the defaulting party if the failure is
occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
embargo, governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the reasonable control and
not caused by the negligence, intentional conduct or misconduct of the
non-performing party and such party has exerted all reasonable efforts to avoid
or remedy such force majeure; provided, however, that in no event shall a party
be required to settle any labor dispute or disturbance.
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13.15 Complete Agreement. This Agreement with its Exhibits, constitutes
the entire agreement, both written and oral, between the parties with respect to
the subject matter hereof, and all prior agreements respecting the subject
matter hereof, either written or oral, express or implied, shall be abrogated,
canceled, and are null and void and of no effect, except that the Research Plan
shall have effect and information exchanged by the parties pursuant to the
Secrecy Agreement between the parties dated September 22, 1998 shall be deemed
to be Confidential Information under this Agreement. No amendment or change
hereof or addition hereto shall be effective or binding on either of the parties
hereto unless reduced to writing and executed by the respective duly authorized
representatives of Symyx and TDCC.
13.16 Dispute Resolution. Any dispute under this Agreement which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by three (3) neutral arbitrators appointed in accordance
with said rules, unless the parties agree to conduct such arbitration with a
single arbitrator. The arbitration shall be held in Wilmington, Delaware, and
the arbitrators shall be independent experts with a background suitable for the
matters in dispute. The arbitrators shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrators shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original and a true copy
thereof. The costs of arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties. Each party shall bear its own
costs and attorneys' and witness' fees. A disputed performance or suspended
performances pending the resolution of the arbitration must be completed within
thirty (30) days following the final decision of the arbitrators or such other
reasonable period as the arbitrators determine in a written opinion. Any
arbitration subject to this Section 13.16 shall be completed within one (1) year
from the filing of notice of a request for such arbitration. The award shall be
final and binding upon the parties hereto. Judgment upon any decision rendered
by the arbitrators may be entered by any court having jurisdiction.
13.17 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
THE DOW CHEMICAL COMPANY SYMYX TECHNOLOGIES
By: /s/ A. J. CARBONE By: /s/ ISY GOLDWASSER
------------------------------- ---------------------------------
A. J. Carbone
Title: Executive Vice President Title: President and COO
---------------------------- ------------------------------
Date: 2 February 1999 Date: 5 February 1999
----------------------------- -------------------------------
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<PAGE> 34
LIST OF EXHIBITS
Exhibit A: Scope of Field
Exhibit B: Procedure for Lead Compound Identification
Exhibit C: Company List
Exhibit D: Direct Chemical Modification
Exhibit E: List for Initial Chemistry FTEs
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<PAGE> 35
EXHIBIT A
SCOPE OF FIELD
THE FIELDS SHALL BE DEFINED AS (HEADINGS ARE FOR CONVENIENCE IN REFERENCE AND
ARE NOT INTENDED TO LIMIT THE DESCRIPTION):
[******]
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EXHIBIT B
PROCEDURE FOR LEAD COMPOUND IDENTIFICATION
1. At such time as Symyx has identified a Library Compound which it
believes may meet the established criteria for a Lead Compound in a particular
activated Field it shall provide the data and results supporting such conclusion
to the Research Committee. Examples of target criteria for Lead Compounds are
set forth in the Lead Compound Criteria Section of the Research Plan.
2. Following the identification of any potential Lead Compound, at
TDCC's request, Symyx shall prepare and deliver to TDCC reasonable gram
quantities of such potential Lead Compound, which TDCC shall use in confirming
whether such potential Lead Compound meets the applicable lead criteria. Symyx
will use commercially reasonable efforts to provide quantities in such amounts
as the Research Committee may determine is reasonably required by TDCC for
testing, and will notify TDCC if it is not commercially reasonable to provide
such quantities to TDCC, in which case the parties agree to meet and discuss how
to proceed with respect to such Lead Compound.
3. The Research Committee shall review the results provided by TDCC with
respect to a potential Lead Compound, and if the Research Committee determines
that such results indicate that the applicable lead criteria have been
satisfied, then such Library Compound shall be deemed to be a Lead Compound for
all purposes of this Agreement.
4. In the event that the Research Committee requests further information
or the conduct of further studies to confirm whether a potential Lead Compound
meets the applicable lead criteria, Symyx and TDCC shall use commercially
reasonable efforts to prepare any such information and conduct such studies.
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EXHIBIT C
COMPANY LIST
[******]
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the omitted portions.
<PAGE> 38
EXHIBIT D
DIRECT CHEMICAL MODIFICATION
[******]
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the omitted portions.
<PAGE> 39
EXHIBIT E
LIST FOR INITIAL CHEMISTRY FTES
[******]
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the omitted portions.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated March 23, 1999
except for Note 6 as to which the date is , 1999, in the Registration
Statement (Form S-1) and related Prospectus of Symyx Technologies, Inc. for the
registration of shares of its common stock.
Ernst & Young LLP
Palo Alto, California
The foregoing consent is in the form that will be signed upon the completion of
the stock split described in Note 6 to the financial statements.
/s/Ernst & Young LLP
Palo Alto, California
September 20, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS AS AT JUNE 30, 1999 AND FOR THE SIX MONTH PERIOD
THEN ENDED AND THE AUDITED FINANCIAL STATEMENTS AS AT DECEMBER 31, 1998 AND FOR
THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> JUN-30-1999 DEC-31-1998
<CASH> 10,699 14,043
<SECURITIES> 6,753 9,339
<RECEIVABLES> 808 626
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 19,387 24,847
<PP&E> 21,617 19,818
<DEPRECIATION> 5,535 3,708
<TOTAL-ASSETS> 60,841 52,903
<CURRENT-LIABILITIES> 15,179 9,146
<BONDS> 0 0
0 0
21 52,510
<COMMON> 7 849
<OTHER-SE> 37,816 (17,193)
<TOTAL-LIABILITY-AND-EQUITY> 60,841 52,903
<SALES> 0 0
<TOTAL-REVENUES> 14,672 13,787
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 15,319 22,258
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 549 731
<INCOME-PRETAX> (234) (8,085)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (234) (8,085)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (234) (8,085)
<EPS-BASIC> (0.04) (2.11)
<EPS-DILUTED> (0.04) (2.11)
</TABLE>
